Stock Market Today: Earnings Speak Louder Than Tariffs
Recent market reaction to Trump administration policy announcements has been "entirely normal."


Big moves for a couple of high-profile names masked a steady undercurrent of basically healthy earnings on Tuesday. Softer-than-expected but still stable employment data continue to support the Federal Reserve's chosen policy path. And a one-month truce in the North American trade war has encouraged market participants who expect the Trump administration to use tariff threats as negotiating tools.
"The postwar bipartisan consensus that the U.S. prospers by fostering cooperation and integration with allies and neighbors is gone," writes Greg Ip in The Wall Street Journal. "In its place looms the prospect of continuous trade war driven not by traditional alliances and ideology, but the priorities of the day."
That's a stark statement, but research from DataTrek shows President Donald Trump's actions are "not a real surprise" to investors.

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The standard deviation for daily S&P 500 price returns is 1.1% over the trailing 10 years. According to DataTrek co-founders Nick Colas and Jessica Rabe, daily moves of less than 1% this past Friday (-0.5%) and Monday (-0.8%) were "entirely normal" and indicate "markets were not entirely surprised by whatever has just happened."
Indeed, the early data show "investors are largely seeing through worrisome trade war headlines."
Meanwhile, according to FactSet, with 36% percent of its components reporting actual results through Friday, 77% of S&P 500 companies have reported a positive earnings per share surprise and 63% have reported a positive revenue surprise.
"The blended (year-over-year) earnings growth rate for the S&P 500 is 13.2%," notes FactSet Senior Earnings Analyst John Butters. "If 13.2% is the actual growth rate for the quarter, it will mark the highest (year-over-year) earnings growth rate reported by the index since Q4 2021."
At the closing bell, the tech-heavy Nasdaq Composite was up 1.4% to 19,654. The broad-based S&P 500 Index added 0.7% to 6,037. And the blue-chip Dow Jones Industrial Average was higher by 0.3% to 44,556.
Labor market data is stable
The first Jobs Friday of 2025 is looming at the end of this week's economic calendar. In the interim, we'll see the private ADP employment summary on Wednesday and weekly initial jobless claims numbers on Thursday.
Today, Job Openings and Labor Turnover Survey (JOLTS) data from the Bureau of Labor Statistics showed that job openings decreased by 556,000 to 7.6 million on the last business day of December.
"Today's JOLTS readings are unlikely to have a significant effect on the Fed's overall policy outlook," writes Barclays Senior U.S. Economist Jonathan Millar. The economist expects policymakers to hold interest rates steady at the next Fed meeting, citing a resilient economy and 100 basis points of cuts to the target range for the federal funds rate since September.
"Indeed," Millar adds, "we think the bar for cuts at upcoming meetings remains elevated unless the data present evidence of an abrupt deterioration in activity or labor market conditions."
Merck has trouble in China
Merck & Co. (MRK) was the worst performer among the 30 Dow Jones stocks on Tuesday, sliding 9.1% after management reported that sales of Gardasil, its second-best-selling drug, declined by 18% during the fourth quarter and that shipments of the HPV vaccine to China are on hold through at least the middle of 2025. MRK has been sliding since late July on talk of its Gardasil trouble in China.
But the big problem for Merck stock could be Keytruda, the pharma giant's blockbuster cancer treatment. "The reaction also seems due to two questions that have nothing to do with the vaccine," posits STAT senior writer Matthew Herper. "How much should investors expect sales of Keytruda, the best-selling drug in the world, to decline in the coming years? And can they trust Merck's guidance on that decline?"
Merck stock has generated a negative total return of nearly 20% over the trailing 12 months. And yet Wall Street is bullish on MRK.
Of the 26 analysts who cover the healthcare stock that are tracked by S&P Global Market Intelligence, 14 rate it a Strong Buy and five say it's a Buy. Seven have it at Hold. The average 12-month price target is $123.97, 36.6% upside from Tuesday's closing price.
AI revolution drives Palantir stock
Palantir Technologies (PLTR) stock surged 24% and was the top-performing stock in the S&P 500 after the AI software provider beat top- and bottom-line expectations for its fourth quarter and issued a better-than-expected outlook for its first quarter and full year.
CEO Alex Karp highlighted "our deepening position at the center of the AI revolution," noting that "our early insights surrounding the commoditization of large language models have evolved from theory to fact." Palantir is seeing momentum in commercial and government sectors "unlike anything that has come before." And this "revolution," Karp intones, "will play out over years and decades."
Wall Street is in wait-and-see mode with Palantir after an explosive run, with 13 analysts rating the stock Hold. Two analysts have it at Strong Buy, and one calls PLTR a Buy. Four rate it a Sell, and two have it as a Strong Sell.
Downside from here based on an average 12-month price target of $57.26 is 44.9%.
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David Dittman is the former managing editor and chief investment strategist of Utility Forecaster, which was named one of "10 investment newsletters to read besides Buffett's" in 2015. A graduate of the University of California, San Diego, and the Villanova University School of Law, and a former stockbroker, David has been working in financial media for more than 20 years.
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