(Jan 26): US stocks opened higher on Monday morning as traders weighed a combination of fresh trade and policy risks against a strong start to fourth-quarter earnings.
The S&P 500 Index rose 0.3% at the open on Monday, led by materials and utilities stocks. Mining firms Freeport-McMoRan Inc and Newmont Corp were among the top-performing stocks as precious metal prices surged. The tech-heavy Nasdaq 100 rose 0.1%, while the blue-chip Dow Jones Industrial Average rose 0.3%.
“Today focus will be on Washington via rising government shutdown risks and the tariff threats on Canada,” wrote Tom Essaye, founder of the Sevens Report. “Any headlines that make a shutdown seem more likely or that tariff threats will actually go through will weigh on markets, while deescalation will help fuel a rebound.”
The risk of a US government shutdown is rising as Democrats pushed to strip funding for the Department of Homeland Security and a number Republicans are called for an investigation after federal agents shot and killed a protester in Minneapolis over the weekend.
Separately, Trump threatened Canada with 100% tariffs on its exports if it moves ahead with a trade deal with China. However, investors are discounting the likelihood the president follows through.
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“With each foray followed by a retreat, markets become increasingly numb to Trump’s bellicosity and grandiosity,” said Emily Bowersock Hill, CEO and founding partner at Bowersock Capital Partners. “As the markets become desensitised, the forays become more aggressive.”
Deutsche Bank strategists said in a Monday note that equity positioning has broadly trended sideways while discretionary positioning continues to rotate out of mega-cap growth and tech into cyclical stocks. Meanwhile, JPMorgan strategists said reports so far this earnings season shows growth is broadening outside of tech this year.
The Trump administration said it would invest in Oklahoma-based USA Rare Earth, sending shares in the magnet minerals company soaring.
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Traders also parsed durable and capital goods orders on Monday morning, both of which came in ahead of Wall Street expectations. The main event this week is a Federal Reserve rate decision due on Wednesday, where investors expect policymakers to hold rates steady.
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