Dow went up 130, but decliners over advancers 3-2 & NAZ gained 252. The MLP index was off 1 to the 324s & the REIT index was weak, falling 6+ to 401. Junk bond funds were flattish & Treasuries saw selling which raised yields. Oil continued a little lower in the 75s & gold was up 8 to 2767 (more on both below).
Dow Jones Industrials
Nvidia (NVDA) stock jumped to help lead the tech sector &
some chip stocks higher following Trump's announcement of a massive,
$500B AI infrastructure project. The project creates a company called Stargate, which will be initially funded by SoftBank (SFTBY), OpenAI, Oracle (ORCL) & UAE-based MGX. Stargate named Nvidia, along with Microsoft (MSFT) & British chip designer Arm (ARM),
as “key initial technology partners” for the project, which aims to
build out US data centers required to power artificial intelligence. OpenAI said Stargate would “begin deploying $100 billion immediately" & invest up to $500B over the next 4 years. “Stargate will be building the physical and
virtual infrastructure to power the next generation of advancements in
AI, and this will include the construction of colossal data centers,
very, very massive structures,” Trump said. “These buildings, these are big, beautiful buildings are going to employ a lot of people.” Trump said the effort is meant to maintain the US lead ahead in developing artificial intelligence ahead of China. NVDA rose 6.24 (4%), SFTBY rose 3.45 (11%), ORCL rose 11.59 (7%), MSFT (a Dow stock) rose 17.70 (4%) & ARM rose 24.73 (16%).
Nvidia, tech stocks rally after Trump announces $500B AI project
JPMorgan Chase (JPM) CEO Jamie Dimon said that a small increase in inflation caused by
the Trump administration's tariff plans would be worthwhile in the
service of national security concerns. Dimon said tariffs are an economic tool that can be used for a variety of
reasons, & that while they could cause inflation, that would be
acceptable if it helped the US meet national security goals. "I
look at tariffs, they are an economic tool, that's it. They're an
economic weapon, depending on how you use it and why you use it and
stuff like that," Dimon added. "People are arguing, is it
inflationary, is it not inflationary? I would put it in perspective — if
it's a little inflationary, but it's good for national security, so be
it. I mean, get over it. National security trumps a little bit more
inflation," he continued. Dimon went on to say that the way the Trump administration might use tariffs to pursue more favorable trade terms or address national security
issues is a more important question than whether they will cause
inflation. "But I think, really, the question is how they get
used. Can they be used to bring people to the table? Yes. Is there some
unfair trade? Yes. Is there some state-owned subsidies? Yes. Is the
president going to use it that way and his team? Yeah, and we'll see.
But how it gets played out — we're going to find out," Dimon said. Pres Trump campaigned on imposing an across-the-board tariff of 10 - 20% on all
imported goods, as well as higher tariffs of up to 60% on goods imported
from China. While he didn't implement those tariffs during his
first 2 days in office, Trump told reporters at the White House that he's planning to start with a 10% tariff on China that would take effect at the start of Feb. "We're
talking about a tariff of 10% on China, based on the fact that they're
sending fentanyl to Mexico and Canada," Trump said. "Probably Feb. 1 is
the date we're looking at." JPM stock went up 21¢.
Jamie Dimon says tariffs can be positive for national security, even if inflationary: 'Get over it'
PepsiCo (PEP)a a Dividend Aristocrat, CEO Ramon Laguarta wants to change the minds of food industry critics inside the new Trump administration. "It's not a worry. I think we've been leading the transformation of the food industry for many years," Laguarta said at the World Economic Forum in Davos, Switzerland. Continued Laguarta, "We've been leaders in sodium reduction, we've been leaders in sugar reduction. We've been leaders in eliminating fat from products. We've been leading in artificial colors." Sentiment around packaged foods stocks has soured in part due to the new administration. Trump's pick to run Health & Human Services (HHS), Robert Kennedy Jr, is a noted longtime critic of the packaged foods industry. Meanwhile, the outgoing surgeon general warned this month alcohol should come with cancer risk labels. The US Food & Drug Administration (FDA) has banned the use of red dye #3 in food, drinks & ingested drugs. Laguarta said PEP doesn't have the dye in its US portfolio. The barrage of health news has investors worried packaged food players may have to reformulate products at a significant cost. The bad press isn't exactly great for business, either. PEP stock rose 46¢.
PepsiCo CEO not worried about Trump's food industry critics
Gold prices edged up to an 11-week high, extending gains for a 3rd straight session as safe-haven demand increased amid concerns about US tariffs under Pres Trump. Spot gold rose 0.2% to $2749 an ounce, its highest since early Nov, while Feb gold futures rose 0.2% to $2766 an ounce. The metal was set for a 3rd straight day of gains, as traders remained cautious as they tried to gauge Trump's policies, which are expected to boost inflation. Gold is seen as a hedge against inflation. The $ had fallen sharply on Mon after Trump avoided details on imposing US trade tariffs, further supporting gold prices. The precious metal, traditionally seen as a safe-haven asset, has held above a 1-month peak since last week. This reflects that the market is bracing for global uncertainty as Trump's policy announcements & tariff declarations are expected to influence market dynamics. Trump said yesterday that he is considering imposing a 10% tariff on Chinese imports starting Feb 1 & also vowed to hit the European Union with tariffs. Increasing tariffs would likely result in a reduced trade imbalance & higher inflation, both of which are seen as positive for the $. A stronger $ typically pushes gold prices lower as it makes the metal more expensive for buyers using other currencies. The US Dollar Index rose 0.2% in Asian trading today, after closing largely unchanged the previous day. The index fell more than 1% on Mon as Trump avoided a tariff announcement.
Gold prices hit safe-haven high amid Trump tariff threats
Oil prices fell, extending the previous session's decline as markets digested Pres Trump's declaration of a national energy emergency on his first day in office & eyed his tariff policies. Brent crude futures fell 36¢ (0.5%) to $78.93 a barrel & US West Texas Intermediate crude futures fell 46¢ (0.6%) to $75.37. Crude prices closed lower today after Trump laid out a sweeping plan to boost oil & gas production, including declaring a national energy emergency to speed up permitting, roll back environmental protections & withdraw the US from the Paris climate pact. Market participants are trying to digest the mixed signals that Trump 2.0 brings to the trajectory of oil prices & the near-term focus will be on whether the goal is to fill the US strategic reserve. Trump's latest energy policies are unlikely to spur near-term investment or change US production growth but they could moderate potential erosion in refined product demand. Analysts also questioned whether Trump's pledge to replenish the strate in the driving seat for markets reserve would make a difference to oil demand as the Biden administration is already buying oil for emergency supplies.
Oil Prices Fall As Investors Eye Trump Policies
NAZ led US stocks higher as Donald Trump's boost to AI demand hopes outweighed fresh tariff worries. Meanwhile, the Dow was up 0.3%, coming off a rise of over 500 points yesterday. Trump is, with investors on alert for any fresh move in the pres's fast-flowing overhaul of policy. His latest push to make the US a leader in AI, an $500B private-sector investment plan & a roll-back of Biden-era safety measures, is giving a bump to techs.
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