The stock market saw a strong rally on Thursday as major indices pushed higher, with the S&P 500 nearing record highs. Investors reacted positively to news that President Donald Trump announced reciprocal tariffs on trade partners but opted to delay their implementation.
Meanwhile, inflation concerns remained in focus as fresh economic data pointed to ongoing pricing pressures.
Major Indices Climb Amid Tariff Developments
1. Dow Jones Industrial Average (DJI) surged more than 350 points, marking a 0.7% increase.2.
S&P 500 (GSPC) added over 1%, closing at 6,115.06—just a few points shy of its all-time high of 6,118.71.
3. Nasdaq Composite (IXIC) saw the most significant gain, rising over 1.5%, driven by strong performances from Nvidia (NVDA) and Tesla (TSLA).
The market absorbed the tariff news well. In a briefing, Trump emphasized his commitment to “fair and reciprocal” tariffs, stating that any country imposing tariffs on U.S. goods would face similar charges in return. However, the delayed implementation, expected as early as April, leaves room for negotiations.
Inflation Data and Market Reactions
The Producer Price Index (PPI) for January indicated that wholesale inflation remains persistent. This follows a hot Consumer Price Index (CPI) reading earlier in the month, which had already dampened hopes for an imminent interest rate cut by the Federal Reserve.
Despite inflationary pressures, corporate earnings season has provided some optimism, with a majority of S&P 500 companies reporting earnings that surpassed expectations.
Stock Highlights – Airbnb, Meta, and More
1. Airbnb (ABNB) soared over 15% after beating Wall Street’s estimates for both revenue and earnings per share in its latest quarterly report. The company posted a revenue of $2.48 billion, exceeding expectations of $2.42 billion, with earnings per share hitting $0.73 against a forecast of $0.59.
2. Meta (META) continued its impressive run, closing higher for the 19th consecutive session. The stock is now up more than 24% for the year, making it one of the standout performers among the so-called “Magnificent Seven” tech stocks.
3. Nvidia (NVDA) and Tesla (TSLA) led gains in the technology sector, with Nvidia jumping over 3% and Tesla climbing 4%.
Market Trends
While tech stocks have dominated the market for the past two years, 2025 appears to be shifting towards a broader stock-picking environment. Nearly 48% of the S&P 500 has outperformed the index so far this year—aligning with historical trends and significantly higher than last year’s 29%.
Richard Bernstein, CEO of Richard Bernstein Advisors, noted that speculation is decreasing, and a more fundamentals-driven investment approach is taking hold.
Interest Rates and Economic Outlook
Speculation is mounting regarding the Federal Reserve’s next moves on interest rates. Following January’s strong inflation data, some analysts, including those at Bank of America, are now considering the possibility of rate hikes later in 2025 or early 2026.
Blake Gwinn, head of U.S. rates strategy at RBC Capital Markets, suggests that tariffs alone are unlikely to trigger rate hikes. However, if policies—such as proposed mass deportations—lead to labor shortages and wage inflation, the Fed may be forced to act.
Tariff Impact and Global Trade Developments
Trump officially signed the executive order on reciprocal tariffs, applying to both allies and adversaries alike. India is set to be one of the first countries to engage in negotiations with the U.S., with Prime Minister Narendra Modi visiting Washington to discuss trade relations. Energy and technology sectors are expected to be central to these discussions.
Other Market Movers
1. Arm Holdings (ARM) jumped over 7% after reports that it is set to launch a new AI chip, with Meta as one of its first major customers.
2. Oil prices saw fluctuations as traders weighed the impact of retaliatory U.S. tariffs and potential peace negotiations between Russia and Ukraine.
3. Mortgage rates edged slightly lower, with the 30-year fixed rate dropping to 6.87%—its lowest level in 2025 but still within a tight range.
Looking Ahead
The stock market continues to be influenced by economic data, corporate earnings, and geopolitical developments. Investors will be closely monitoring upcoming economic reports and central bank statements for further insight into the direction of interest rates. With a broader range of stocks showing strength, the market landscape in 2025 appears to be shifting toward a more balanced investment environment.
For now, as the S&P 500 inches closer to record highs, traders and investors remain cautiously optimistic about what lies ahead.