Markets edge higher led by techs, as traders look past US tariff threats

Dow went up 40, advancers over decliners 4-3 & NAZ jumped 214.  The MLP index added 3+ to the 323s & the REIT index slid back 1+ to the 405s.  Junk bond funds were about even & Treasuries saw limited buying which reduced yields slightly (more below).  Oil rose 1+ to the 72s & gold rocketed ahead 46 to 2933.

Dow Jones Industrials

Pres Trump plans to announce 25% tariffs on all aluminum & steel imports into the US early this week.  Trump is expected to announce the new tariffs on steel & aluminum imports on today.  He also plans to announce "reciprocal tariffs" – or tariffs directed at countries that impose duties on US exports, on Tues or Wed.  "Very simply, if they charge us, we charge them," Trump said.  "If they are charging us 130% and we're charging them nothing, it's not going to stay that way."  "Every country will be reciprocal," he added.  The newest tariffs echo the 25% steel tariffs & 10% aluminum tariffs that his first administration imposed in 2018.  At the time, the US was the biggest importer of steel, while China was the largest exporter of steel.  Likewise, the US is still one of the largest importers of aluminum, along with Germany & China.  On Feb 1, Trump introduced the Intl Emergency Economic Powers Act (IEEPA), which includes 25% tariffs on imports from Canada & Mexico & a 10% tariff on imports from China.  The tariffs have received mixed reactions from consumers & negative pushback from foreign leaders, including Canadian Prime Minister Justin Trudeau & Mexican Pres Claudia Sheinbaum.  "We need to protect Americans, and it is my duty as President to ensure the safety of all," Trump wrote on Feb 1.  "I made a promise on my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders, and Americans overwhelmingly voted in favor of it."

Trump plans to unveil 25% tariffs on aluminum and steel imports amid trade policy overhaul

McDonald's (MCD), a Dow sock & Dividend Aristocrat, reported disappointing quarterly revenue, dragged down by weaker-than-expected sales at its US restaurants following an E coli outbreak just weeks into the qtr.  Net sales of $6.4B were roughly flat compared with the year-ago period.  Overall same-store sales growth of 0.4% outperformed expectations of same-store sales declines of 1%.  But its US business reported a steeper-than-expected drop in its same-store sales.  Same-store sales at the company's domestic restaurants fell 1.4% in the qtr; the forecast was projecting same-store sales declines of 0.6%.  Traffic was slightly positive, but customers spent less than usual during the qtr.  Over the summer, the chain rolled out a $5 combo meal to bring back price-conscious diners & reverse sluggish sales.  The strategy worked, helping US same-store sales tick up in the 3rd qtr.  However, analysts have warned that value meals only work if customers also add menu items that aren't discounted to their orders.  Execs downplayed those concerns, saying the average check on the $5 meal deal is more than $10.  4th-qtr EPS was $2.80, down slightly from $2.80 a year earlier.  Excluding gains tied to the sale of its South Korean business, transaction costs for buying its Israeli franchise & other items, EPS was $2.83.  Looking to 2025, the first qtr is expected to be the low point for same-store sales, CFO Ian Borden said, citing a weak start to the year in the US, among other factors.  Winter storms & wildfires in California weighed on restaurant traffic across the industry in Jan.  For the full year, MCD plans to open 2200 restaurants.  About a qtr of those locations will be in the US & its intl operated markets.  The rest will be in the company's intl developmental licensed markets, including about 1000 new restaurants in China.  The stock rose 12.45 (4%).

McDonald’s revenue disappoints, as U.S. sales see worst drop since pandemic

Treasury yields edged lower as investors looked ahead to several key economic data points this week & braced themselves for new tariff announcements.  The 10-year Treasury yield was down less than 1 basis point at 4.477%, while the 2-year Treasury yield dipped more than 2 basis points at 4.256%.  Yields & prices move in opposite directions, & 1 basis point equals 0.01%.  Investors are awaiting a slew of economic data this week, with the core inflation reading, excluding volatile food & energy prices on Wed to offer insights about the health of the US economy.  That will be followed by the producer price index & initial weekly jobless claims on Thurs & then retail sales data on Fri.  Federal Reserve Chair Jerome Powell is expected to testify before Congress on Tues & Wed, & investors will watch closely for clues about future monetary policy decisions.  There are also worries about Pres Trump's latest tariff plans.

Treasury yields edge lower ahead of key economic data, tariff announcements this week

Stocks rose, eyeing a bounce back from sharp losses as steelmakers rallied after Pres Trump said he will impose new tariffs on steel & aluminum imports.  Investors are weighing Trump's pledge to introduce additional 25% tariffs on steel & aluminum from all countries (see above).  The new metals tariffs are likely to benefit US steel companies.