Joey Solitro
Investors welcomed President Donald J. Trump back to the White House with a broad-based if cautiously optimistic rally on Tuesday. Ten of the 11 S&P 500 sectors closed in the green, and bond yields retreated from recent highs on the appearance of restraint with regard to new tariff policy a day into the restored administration.
"Earnings season is underway and, thanks to the banks, it's off to a good start. Currently, consensus estimates are calling for a strong 12% year-over-year increase in S&P 500 earnings per share (EPS) for the fourth quarter of 2024," says Jeffrey Buchbinder, chief equity strategist at LPL Financial.
Buchbinder cites "steady economic growth" as support for companies to beat estimates but also identifies multiple headwinds, including regulatory, trade and immigration policies as well as the U.S. dollar.
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"Policy developments will have a lot to do with whether Wall Street's expectations for double-digit S&P 500 earnings growth in 2025 will be realized. With valuations high, corporate America needs to come through," Buchbinder adds. Indeed, here are five tips for investing in Trump's second presidency.
Keep up with key developments – including forward-looking C-suite commentary and perspectives on potential policy in a second Trump administration – on our live earnings season blog.
The yield on the 10-year U.S. Treasury note declined to 4.564% from 4.623% on January 17. The 10-year Treasury yield has backed off from a recent high of 4.896% on January 13.
"While President Trump's Inauguration Day policy announcements on tariffs were more benign than expected, we continue to expect the White House to increase tariff rates on autos and imports from China, and we see other tariff proposals as a risk," writes Goldman Sachs Chief Economist Jan Hatzius.
At the closing bell on the first trading day of the second Trump administration, the blue-chip Dow Jones Industrial Average added 1.2% to 44,025. The broad-based S&P 500 was up 0.9% to 6,049. And the tech-heavy Nasdaq Composite rose 0.6% to 19,756.
Analysts bite AAPL
Apple (AAPL) stock fell 3.2% on the heels of a downgrade by Jefferies analysts centered around iPhone sales and a weakening consumer electronics market. Jefferies downgraded the technology giant to Underperform (equivalent to a Sell) from Hold and lowered its price target to $200.75 from $211.84.
"Our concern about weak demand for iPhone has materialized," writes Jefferies analyst Edison Lee. "AI would be unlikely to kickstart a super upgrade cycle anytime soon." The analyst cited survey data showing that U.S. consumers don't see the utility of artificial intelligence features right now.
AAPL– the worst-performing Dow Jones stock on Tuesday – is down nearly 10% over the past month and has once again surrendered the top spot in the global market cap rankings to Nvidia (NVDA). Based on Jefferies' new target price and AAPL's Tuesday closing price, downside from here is 9.8%.
Meanwhile, J.P. Morgan analyst Samik Chatterjee maintained an Overweight rating on AAPL but cut his 12-month price target to $260 from $265. Chatterjee cited shrinking market share in China and the strength of the U.S. dollar as well as weak uptake of new AI features for the price-target reduction.
Trump stocks
NVDA stock rose 2.3% after President Trump revoked a 2023 executive order signed by former President Joe Biden that created government oversight of AI developers.
Tesla (TSLA) was down 0.6% after President Trump said in his inaugural address that he would "revoke the electric-vehicle mandate," though no such federal mandate exists.
As Al Root of Barron's suggests, the 47th president was likely referring to Environmental Protection Agency rules that effectively require automakers to eventually produce and sell all battery EVs at the risk of incurring fines for emissions.
"We will end the Green New Deal, and we will revoke the electric-vehicle mandate, saving our auto industry and keeping my sacred pledge to our great American auto workers," Trump said.
General Motors (GM), which will report fourth-quarter and full-year 2024 financial results before the market opens next Tuesday, January 28, surged 5.7% on Tuesday. Ford (F), scheduled to release its fourth-quarter and full-year results after the market closes on Wednesday, February 5, was up 2.5%.
MicroStrategy (MSTR) gave back 1.9% the day after President Trump didn't mention cryptocurrency or bitcoin in his inaugural address.
And Trump Media & Technology (DJT) declined 11.1% on the first full trading day of its namesake's new administration.
Strong earnings
Charles Schwab (SCHW) was up 6% after the discount brokerage and wealth management firm beat Wall Street expectations with its fourth-quarter results.
Net interest income – the biggest share of revenue – was up 19% to $2.53 billion from a year ago. One of the best long-term investment stocks, SCHW is now up 21.6% over the trailing 12 months.
3M (MMM) stock rallied 4.2% after the global industrial and technology company beat top- and bottom-line expectations for its fourth quarter and issued a positive outlook for 2025.
CEO Bill Brown said 3M is "carrying this momentum forward and [we] are confident in our ability to deliver our 2025 guidance." MMM – the best-performing Dow stock on Tuesday – is up 35.4% over the trailing 12 months.
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