Stocks See Support from Metal Producers after Trump Slaps Tariffs on Steel and Aluminum

The S&P 500 Index ($SPX) (SPY) today is up +0.39%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.87%.  March E-mini S&P futures (ESH25) are up by +0.35%, and March E-mini Nasdaq futures (NQH25) are up by +0.92%. 

Stock indexes today are mildly higher, led by gains in US metals makers and mining stocks after President Trump imposed a 25% tariff on US steel and aluminum imports.  The tariff increases also boosted gold prices to a record high and copper prices to a 4-month high.  M&A activity is also supportive of stocks after Hyatt Hotels agreed today to purchase Playa Hotels & Resorts NV for $13.50 per share, or about $2.6 billion.

Corporate earnings results today are mixed for stocks.  On the positive side, Rockwell Automation is up more than +9% after reporting stronger-than-expected Q1 adjusted EPS. Also, McDonald’s is up more than +5% after reporting an unexpected increase in Q4 comparable sales.  On the negative side, Incyte Corp is down more than -6% after reporting Q4 adjusted EPS below consensus.  Also, ON Semiconductor is down more than -3% after forecasting Q4 revenue below consensus.

The markets this week will focus on Tuesday’s semiannual monetary policy testimony by Fed Chair Powell to the Senate Banking Committee.  On Wednesday, US Jan CPI will be released and is expected to remain unchanged from Dec at 2.9% y/y, while Jan core CPI is expected to ease to 3.1% y/y from 3.2% in Dec.  Also on Wednesday, Fed Chair Powell testifies on the economy and monetary policy before the House Financial Services panel.  On Friday, Jan retail sales are expected to fall -0.1% m/m and Jan manufacturing production is expected to climb +0.1% m/m.

Earnings season is in full swing as companies report Q4 earnings results.  According to Bloomberg Intelligence, analysts estimate S&P 500 earnings grew by +7.5% y/y in Q4, the second-highest pre-season forecast in the past three years.

The markets are discounting the chances at 8% for a -25 bp rate cut at the next FOMC meeting on March 18-19.

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.46%.  China’s Shanghai Composite Index rallied to a 5-week high and closed up +0.56%.  Japan’s Nikkei Stock 225 closed up +0.04%.

Interest Rates

March 10-year T-notes (ZNH25) today are up by +2 ticks.  The 10-year T-note yield is down by -2.2 bp to 4.473%.  March T-notes today are slightly higher.  Today’s rally in European government bonds is providing carryover support to T-notes.  T-note prices are also seeing some short covering ahead of Tuesday’s semiannual monetary policy testimony by Fed Chair Powell to the Senate Banking Committee.

Gains in T-notes are limited after President Trump revealed plans to impose 25% tariffs on all steel and aluminum imports into the US, raising concern that rising tariffs may boost inflation and limit the Fed’s ability to cut interest rates.  Supply pressures are also undercutting T-note prices as the Treasury will auction $125 billion of T-notes and T-bonds this week for the Feb quarterly refunding, beginning with Tuesday’s $58 billion auction of 3-year T-notes. 

European government bond yields today are moving lower.  The 10-year German bund yield is down -1.2 bp to 2.360%.  The 10-year UK gilt yield is down -3.2 bp to 4.445%.

The Eurozone Feb Sentix investor confidence index rose +5.0 to a 7-month high of -12.7, stronger than expectations of -16.5.

ECB Vice President Guindos warned that implementation of tariffs by the US would create a “supply shock” that “fundamentally” affects world economic expansion.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the March 6 policy meeting.

US Stock Movers

Aluminum and steel company stocks are climbing today after President Trump announced plans to impose 25% tariffs on steel and aluminum imports into the US, which will limit competition for US producers.  As a result, Cleveland-Cliffs (CLF) and Century Aluminum (CENX) are up more than +12%.  Also, Nucor Corp (NUE) is up more than +6%.  In addition, Alcoa (AA), Commercial Metals (CMC), Steel Dynamic (STLD), and US Steel (X) are up more than +2%.   

Axsome Therapeutics (AXSM) is up more than +15% after announcing it has entered into a settlement agreement with Teva Pharmaceuticals to resolve patent litigation. 

Rockwell Automation (ROK) is up more than +9% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of $1.83, stronger than the consensus of $1.56. 

Monday.com (MNDY) is up more than +25% after reporting Q4 EPS of 43 cents, well above the consensus of 15 cents. 

McDonald’s (MCD) is up more than +5% to lead gainers in the Dow Jones Industrials after reporting an unexpected increase in Q4 comparable sales of +0.5%, better than the consensus of a -0.93% decline. 

Shopify (SHOP) is up more than +4% after Benchmark upgraded the stock to buy from hold with a price target of $150.

Robert Half (RHI) is up more than +2% after BNP Paribas Exane double-upgraded the stock to outperform from underperform with a price target of $71.50. 

Incyte Corp (INCY) is down more than -6% to lead losers in the S&P 500 after reporting Q4 adjusted EPS of $1.43, weaker than the consensus of $1.50.

Bio-Techne (TECH) is down more than -5% to lead makers of lab-tool equipment lower after the National Institutes of Health said it plans to cut billions of dollars in reimbursements to medical researchers by lowering the maximum “indirect cost rate” that research institutions can charge the government. 

ON Semiconductor (ON) is down more than -3% to lead losers in the Nasdaq 100 after forecasting Q4 revenue of $1.72 billion, weaker than the consensus of $1.76 billion. 

Semtech (SMTC) is down more than -27% after saying that 2026 net sales of its CopperEdge products are expected to be lower than the company’s floor case estimate of $50 million due to rack architecture changes. 

Illumina (ILMN) is down more than -5% after Barclays downgraded the stock to underweight from equal weight with a price target of $100. 

Charles Schwab (SCHW) is down more than -3% after TD Bank Group said it plans to sell its entire equity investment in Schwab through a secondary stock offering. 

NetApp (NTAP) is down more than -2% after Susquehanna Financial downgraded the stock to neutral from positive. 

Earnings Reports (2/10/2025)

Arch Capital Group Ltd (ACGL), Cincinnati Financial Corp (CINF), Incyte Corp (INCY), Loews Corp (L), McDonald’s Corp (MCD), ON Semiconductor Corp (ON), Rockwell Automation Inc (ROK), Vertex Pharmaceuticals Inc (VRTX).