Stocks Rise as Trump Takes Office; Earnings Season Holds Key Market Insights

U.S. stock index futures rose on Monday evening following President Donald Trump's inauguration and the announcement of several executive orders. Investor focus for the week shifted to corporate earnings, with prominent companies like Netflix, Johnson & Johnson, Procter & Gamble, and American Express slated to release their quarterly results. These reports were seen as crucial indicators of financial health and economic momentum under the new administration.

Early earnings from banks highlighted strong trading revenues and deal-making, signaling resilience despite potential headwinds. Analysts predicted a 9% upside for the S&P 500, underpinned by strong earnings growth, even as elevated borrowing costs posed challenges. This earnings season was viewed as a barometer for assessing the broader impact of Trump’s policies on key sectors such as healthcare, consumer goods, and financial services.

Donald Trump’s inauguration as the 45th President of the United States marked the beginning of an administration poised to implement transformative economic and policy changes. In his inaugural address, Trump articulated his “America First” vision, focusing on revitalizing American industry, enforcing stricter immigration controls, and emphasizing domestic interests over globalization. Within days, he issued executive orders targeting increased fossil fuel production, reduced environmental regulations, and border security measures, including laying the groundwork for a U.S.-Mexico border wall. These immediate actions reflected his commitment to upending the status quo and aligning governance with his campaign promises, stirring both optimism and apprehension among investors.

Trump's trade policies took center stage as he refrained from imposing immediate tariffs, opting instead to direct federal agencies to assess trade relationships with key partners, including China, Canada, and Mexico. The proposed creation of the External Revenue Service aimed to collect significant tariffs and duties, supporting his pledge to protect American workers and industries by taxing foreign goods and incentivizing domestic manufacturing. This delayed approach to tariffs eased market anxieties, spurring a relief rally in global stocks and strengthening major currencies against the dollar. However, uncertainty persisted over Trump’s broader trade agenda, particularly regarding potential disruptions to longstanding agreements like the USMCA and the U.S.-China trade deal.

Financial markets displayed mixed reactions as they navigated the implications of Trump’s early policies. Optimism surrounding corporate tax cuts and deregulation bolstered equities, but rising bond yields weighed on their attractiveness. Analysts noted a negative correlation between stocks and the 10-year Treasury yield, which hovered near multi-month highs, driven by robust economic data and inflation concerns. Morgan Stanley projected this trend to persist until yields fell below 4.50%, while Goldman Sachs anticipated modest declines to 4.35% by year-end. Despite these pressures, corporate earnings were expected to drive market gains, with S&P 500 companies forecasted to report a 10.4% year-over-year increase in fourth-quarter profits.

Data for Technical Analysis (1H) CFD US30 DJIA

Resistance : 43616.5, 43693.9, 43819.2

Support : 43365.9, 43288.5, 43163.2           

1H Outlook    

Source: TradingView                            

Buy/Long 1 If the support at the price range 43265.9 - 43365.9 is touched, but the support at 43365.9 cannot be broken, the TP may be set around 43691.4 and the SL around 43215.9, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 43616.5 - 43716.5, TP may be set around 43885.0 and SL around 43316.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 43616.5 - 43716.5 is touched, but the resistance at 43616.5 cannot be broken, the TP may be set around 43363.4 and the SL around 43766.5, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 43265.9 - 43365.9, TP may be set around 43025.0 and SL around 43667.0, or up to the risk appetite.       

Pivot Points Jan 21, 2025 02:30AM GMT