Wall Street takes Trump’s latest tariff threats in stride, and indexes rise

NEW YORK (AP) - Wall Street is taking President Donald Trump's latest threat on tariffs in stride, on the whole, and U.S. stock indexes are rising. The S&P 500 rose 0.7% Monday, coming off a losing week bookended by worries about how potential tariffs could threaten the economy. The Dow Jones Industrial Average added 0.4%, and the Nasdaq composite rose 1%. Stocks of U.S. steel and aluminum producers jumped after Trump said he will impose tariffs on all such imports. McDonald's also climbed on strength for its restaurants outside the United States. Treasury yields held mostly steady in the bond market.

THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.

NEW YORK (AP) - Wall Street is taking President Donald Trump's latest threat on tariffs in stride, on the whole, and U.S. stocks are rising on Monday.

The S&P 500 was up 0.7% in afternoon trading, coming off a losing week that was bookended by worries about how potential tariffs could push up inflation and threaten the economy. The Dow Jones Industrial Average was up 163 points, or 0.4%, as of 1:57 p.m. Eastern time, and the Nasdaq composite was 1.2% higher as Nvidia and other Big Tech stocks led the way.

The bond market also remained relatively firm, with Treasury yields mostly steady after Trump said over the weekend that he would announce 25% tariffs on all steel and aluminum imports, as well as other import duties later in the week.

Fear around tariffs has been at the center of Wall Street's moves recently, and experts say the market likely has more swings ahead. The price of gold, which often rises when investors are feeling nervous, climbed again Monday to top $2,930 per ounce and set another record. But Trump has shown he can be just as quick to pull back on threats, like he did with 25% tariffs he had announced on Canada and Mexico, suggesting they may be merely a negotiating chip rather than a true long-term policy.

Trump, of course, has already gone ahead with 10% tariffs on China. Those will likely affect Wall Street by cleaving winning industries from losing ones, but they won't necessarily drag the entire market lower, according to Michael Wilson and other strategists at Morgan Stanley. A big, market-wide impact would be more likely "if we were to see sustained tariffs on a range of countries including 25% tariffs on Mexico and Canada."

Stocks of U.S. steel and aluminum producers jumped Monday, banking on expectations tariffs could help their profits, while the overall S&P 500 index remained relatively calm.

Nucor rose 6.5%, Cleveland-Cliffs jumped 19% and Alcoa climbed 3.2%.

Some companies that have to buy steel in their manufacturing were swinging, but less sharply. General Motors fell 1.3%, Ford Motor lost 0.1% and Caterpillar rose 0.2%.

In the meantime, earnings reports from big U.S. companies are also helping to drive trading.

McDonald's climbed 4.7% even though it reported profit and revenue for the end of 2024 that was just shy of analysts' expectations. Investors focused instead on better-than-expected strength for its restaurants outside the United States, particularly in the Middle East, Japan and other markets with licensed McDonald's locations.

Big Tech stocks were some of the strongest forces pushing the S&P 500 higher, including gains of 3.5% for Nvidia and 4.7% for Broadcom. They had come under pressure last month after a Chinese upstart upended Wall Street’s artificial-intelligence boom by saying it had developed a large language model that could perform like the world’s best without having to use the most expensive, top-flight chips.

Despite the development by DeepSeek, big U.S. companies have said in recent weeks that they’re still planning to plow billions of dollars into their AI endeavors. That’s calmed worries that DeepSeek could have turned off a huge spigot of spending for the industry, at least for now.

Such gains helped offset a 5.9% drop for Incyte after the biopharmaceutical company reported weaker profit for the latest quarter than analysts expected.

In the bond market, the yield on the 10-year Treasury held steady at 4.50% from late Friday. The yield on the two-year Treasury, which more closely tracks expectations for what the Federal Reserve will do with short-term interest rates, fell. It eased to 4.27% from 4.29%.

The Fed cut its main interest rate several times through the end of last year, but traders have been sharply curtailing their expectations for more reductions in 2025, in part because of fears about potentially higher inflation from tariffs. While lower rates can give a boost to the economy and investment prices, they can also give inflation more fuel.

Fed Chair Jerome Powell will be offering testimony before Congress later this week, where he could offer more hints about what the Fed is thinking. In December, Fed officials sent financial markets sharply lower after indicating they may cut rates only twice this year. Now, some traders and economists think the Fed may not cut at all.

Reports are also coming this week on inflation, which could further drive the Fed's actions. On Wednesday, economists expect a report to show prices for eggs, gasoline and other living costs for U.S. consumers were overall 2.9% higher in January than a year earlier.

In stock markets abroad, indexes rose across much of Europe and Asia.

Tokyo's Nikkei 225 was virtually unchanged after Japan's government reported a record current account surplus last year.