Donald J. Trump was inaugurated last Monday as the 47th President of the Unites States of America. His inauguration happened to line up with Martin Luther King, Jr. Day, which was a market holiday. When markets reopened on Tuesday, they resumed their upward movement. The S&P 500 gained 1.7% and 10 of the 11 S&P 500 sectors registered gains ranging from 0.8% (consumer discretionary) to 4.0% (communication services). The sole laggard was the energy sector (-2.9%), which traded down along with oil prices on some worries that a “drill, baby, drill” approach could lead to a supply-demand imbalance.
Investors spent last week considering President Trump’s barrage of executive orders and his declaration of a national energy emergency. Investors were particularly pleased that Trump’s initial actions did not include any new tariffs in Chinese goods. However, Trump did suggest that he is thinking of 25% tariffs for Canada and Mexico starting February 1.
Besides the lack of new tariffs on China, investors were also excited by Trump’s announcement of a $500 billion AI infrastructure initiative, named Stargate, that involves OpenAI, Softbank, and Oracle (ORCL).
President Trump stated that he will demand that interest rates come down immediately. That was interpreted as a direct shot at Fed Chairman Jerome Powell, who will be leading the FOMC meeting January 28-29. Trump later told reporters that he believes he knows more about interest rates than Powell, that he will speak to him “at the right time,” and that he believes the Fed will listen to him.
This week’s Fed meeting will be a focal point in a big week next week that includes reports from Apple (AAPL), Microsoft (MSFT), Meta Platforms (META), Amazon.com (AMZN), and Tesla (TSLA), as well as the PCE Price Index.