[New York Stock Market] "No Day One Tariff Bomb" Broad Rise... Treasury Yields and Dollar Also Fall

Market Rises on First Trading Day After Start of Trump’s Second Term
Market Relieved as New Tariff Measures Are Delayed
Treasury Yields and Dollar Fall as Inflation Concerns Ease
Positive Boost from News of New Investments by OpenAI and Others
International Oil Prices Weaken on Expectations of Increased U.S. Oil Production

The U.S. New York stock market collectively rose on the first trading day following President Donald Trump's inauguration. The market was relieved as President Trump did not unleash the expected 'tariff bomb' on day one of his administration. News that the White House would announce large-scale investments in artificial intelligence (AI) with private companies also stimulated investor sentiment. With expectations of gradual tariff increases, U.S. Treasury yields and the dollar, which had surged amid concerns over 'Trumflation' (inflation caused by Trump’s policies), fell significantly.

AFP Yonhap News

On this day in the New York stock market, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 44,025.81, up 537.98 points (1.24%) from the previous trading day. The S&P 500, focused on large-cap stocks, rose 52.58 points (0.88%) to 6,049.24, and the tech-heavy Nasdaq index gained 126.58 points (0.64%) to close at 19,756.78.

President Trump, known as the 'Tariff Man,' reassured the market by only confirming the principle of imposing tariffs on his inauguration day. Although he ordered a full review of existing trade agreements, he postponed new tariff measures. This was unexpected compared to the dozens of executive orders issued on border and energy issues. Trump stated that a universal tariff of 10-20% on all imports was not yet ready. He said a 25% tariff on Mexico and Canada was under review for February 1. Investors interpreted this as a signal that tariffs would be imposed gradually due to inflation concerns.

Alex Phillips, Chief Political Economist at Goldman Sachs in the U.S., said, "President Trump’s tariff policy announcement on inauguration day was more moderate than expected," adding, "For now, the priority of tariff policies is lower than we anticipated."

Mohit Kumar, strategist at Jefferies International, analyzed, "With deregulation and tariffs not as bad as feared, risk assets will benefit," and added, "The easing of tariff burdens and the outlook for lower oil prices are also positive for bond yields." However, he cautioned, "Volatility will remain a factor."

As concerns over tariff-driven inflation eased, Treasury yields and the dollar weakened. The yield on the 10-year U.S. Treasury note, a global bond yield benchmark, fell 4 basis points (1bp = 0.01 percentage points) from the previous day to 4.56%. However, the 2-year Treasury yield, sensitive to monetary policy, remained steady at around 4.27%.

The dollar also declined. The Dollar Index, which measures the U.S. dollar's value against the currencies of six major countries, dropped 1.28% from the previous day to 107.8.

Nonetheless, concerns remain about the uncertainty of Trump’s second-term tariff policies, as the possibility of new tariff measures being introduced in the future is high.

News of new AI investments by President Trump and private companies also boosted investor sentiment. On this day, foreign media including CBS reported that President Trump would announce a new AI investment plan worth up to $500 billion (approximately 718 trillion won) at the White House in the afternoon, led by Japan’s SoftBank, OpenAI, and Oracle. These three companies are said to have established an AI infrastructure joint venture called 'Stargate,' initially investing $100 billion (about 144 trillion won) and up to $500 billion over the next four years. Expectations of eased AI regulations also fueled buying momentum.

Wall Street’s focus is on whether the Trump administration’s second term will fulfill its pro-business promises. During his candidacy, Trump pledged to lower the top corporate tax rate and ease regulations. The day before, he declared a national energy emergency to expand fossil fuel drilling and production.

By stock, Oracle surged 7.17% on news of new AI investments announced at the White House. 3M jumped 4.16% after reporting better-than-expected earnings. AI leader Nvidia rose 2.27%. Amazon increased 2.11%, and Alphabet, Google’s parent company, gained 1.05%. Bank stocks also saw buying interest amid deregulation hopes, with JPMorgan Chase and Bank of America (BoA) rising 1.45% and 0.28%, respectively. Apple plunged 3.19% after Wall Street downgraded its investment rating.

International oil prices fell as expectations of increased supply spread following President Trump’s indication of expanded oil production. West Texas Intermediate (WTI) crude dropped $1.99 (2.6%) to $75.89 per barrel, while Brent crude, the global oil price benchmark, closed down $0.86 (1.1%) at $79.29 per barrel.