
On Tuesday (January 22), major U.S. stock indices rose across the board, with the S&P 500 and the Dow Jones Industrial Index both reaching their highest levels in over a month. Investors felt encouraged by the new administration not immediately implementing a comprehensive tariff policy after weighing the first batch of executive measures by the Trump administration.
Uncertainty Surrounds Trump's Tariff Policy
In his initial actions as president, Trump did not uphold his promise of imposing sweeping tariffs on major trading partners. Instead, he stated that he is considering imposing tariffs on Canadian and Mexican goods as early as February 1. Although the specific plans for the tariff policy have not yet been released, Goldman Sachs analysts have lowered the probability of comprehensive tariffs being implemented this year from a December forecast of 40% to 25%.
Carol Schleif, Chief Market Strategist at BMO Private Wealth, believes that Trump's temporary omission of tariff decisions is an unexpected positive for the market. She pointed out that investors hope the government will adopt a more precise and flexible strategy regarding tariff policy, rather than a blunt approach. However, Schleif also warned that as uncertainty around the tariff policy increases, market volatility may arise.
Strong Performance in Indices, Small Caps Lead the Way
Amid the general rise in U.S. stocks, the Russell 2000 Index, which focuses on the domestic market and small caps, was particularly outstanding, with a gain of 1.85%, clearly outperforming large-cap indices. This indicates growing confidence in the internal growth potential of the U.S. economy.
Among the 11 major sectors of the S&P 500 Index, 10 recorded gains, with the industrial sector being the most prominent, rising by 2.03%. The industrial giant 3M saw a 4.2% increase in its stock price due to its optimistic fourth-quarter profit report, significantly contributing to the sector's performance. The energy sector was the only one to record a decline, falling by 0.64%.
Federal Reserve Policy Expectations Stable
According to the FedWatch tool from CME Group, the market widely expects the Federal Reserve to keep interest rates unchanged at next week's meeting, with the first rate cut possibly occurring in June. This policy expectation has provided some support to the market.
Market Outlook
Analysts believe that although the overall market performance is optimistic, the trade policy of the Trump administration may still cause volatility, especially as specific tariff measures become clearer. Investors need to continue monitoring the next steps of the Trump administration and the trends in Federal Reserve policy.
The rise in U.S. stock markets signifies a positive response to initial policies from the new government, but the future trajectory will still depend on the details of trade policies and potential changes in the global economy.

