Title: Wall Street Kicks Off Trump’s Second Term with Gains: What Investors Need to Know

As President Donald Trump begins his second term, the U.S. stock market has responded with optimism, with the S&P 500 rising 0.9%, the Dow Jones Industrial Average adding 538 points (+1.2%), and the Nasdaq composite climbing 0.6%. Strong corporate earnings and easing Treasury yields provided a boost to investor sentiment, while global markets remained cautious amid Trump’s plans to reshape global trade policies.

Let's dive into the key takeaways from today's market action and what it means for investors using index funds, ETFs like QQQ and SPY, and long-term portfolio strategies like Index Rebalancing.

Market Drivers: Earnings Season in Full Swing

A significant factor behind the market’s upward momentum was the positive earnings reports from key companies:

• Charles Schwab (SCHW) surged 5.9% after reporting better-than-expected earnings, with total client assets rising 19% to $10.10 trillion.
• 3M (MMM) climbed 4.2% after exceeding analysts' expectations for Q4 profit and revenue, and issuing 2025 forecasts in line with Wall Street's outlook.
• Moderna (MRNA) gained 5.4% after securing $590 million in awards from the U.S. government to continue developing flu vaccines.
• Oracle (ORCL) rallied 7.2% amid expectations that Trump will soon announce investments in AI infrastructure involving the tech giant.

These results highlight the resilience of corporate America despite uncertainties surrounding inflation and future interest rate policies.

Trump’s Tariff Threats and Market Impact

While domestic markets celebrated strong earnings, global markets reacted more cautiously to Trump’s aggressive trade rhetoric. The Mexican peso and Canadian dollar fell sharply after Trump announced a 25% tariff on imports from both countries starting February 1. This move has fueled fears of escalating trade tensions that could impact international supply chains and corporate earnings.

Investors should monitor how these policies could affect broad-based index funds like the S&P 500 ETF (SPY) and the Nasdaq-100 ETF (QQQ), both of which contain companies with significant global exposure.

Bond Market Movement and Its Effect on Stocks

Treasury yields, which have been a major market driver in recent months, eased on Tuesday. The 10-year Treasury yield fell to 4.56% from 4.62%, offering relief to stock markets. Lower yields typically reduce borrowing costs for businesses and consumers, making stocks more attractive compared to bonds.

However, Morgan Stanley strategist Michael Wilson noted that longer-term yields will continue to be a major influence on market performance, cautioning that stocks could face renewed pressure if the 10-year yield remains above 4.50%.

This underscores the importance of having a well-balanced portfolio that adjusts for interest rate fluctuations—a principle at the heart of Index Rebalancing, which helps investors lock in gains and manage risk during shifting economic conditions.

Market Winners and Losers

Big Gainers:

• eBay (+9.9%): Announced a collaboration with Meta to display listings on Facebook Marketplace in select countries.
• Delta Air Lines (upcoming earnings report): Investors are eyeing its Q1 earnings report for signs of strength in travel demand.

Big Losers:

• Walgreens Boots Alliance (-9.2%): The pharmacy chain faced pressure after the U.S. Justice Department accused it of improperly filling prescriptions for controlled substances.

What This Means for Investors

With Trump’s return to the White House and ongoing economic uncertainty, the market landscape is shifting rapidly. Now more than ever, investors should focus on Index Rebalancing strategies to:

1. Mitigate risk: Trade tensions and policy shifts can introduce volatility—rebalancing helps maintain stability in uncertain times.
2. Lock in gains: With market rallies like today’s, taking profits and reinvesting wisely can optimize returns.
3. Stay diversified: The right mix of sectors and asset classes can help weather potential downside risks from economic and geopolitical events.

Looking Ahead: Key Market Events

1. Federal Reserve Policy Moves: Future rate cut decisions will hinge on inflation trends and economic data.
2. Friday’s Jobs Report: A crucial indicator of labor market health that could influence Fed policy.
3. Tech Earnings Reports: With AI-driven companies like Oracle and Microsoft at the forefront, their results could shape market sentiment.

Final Thoughts: Stay Ahead with Index Rebalancing

While the market kicked off Trump’s second term with gains, uncertainties remain regarding tariffs, interest rates, and corporate earnings. Investors can navigate these uncertainties by staying proactive with a disciplined Index Rebalancing strategy, ensuring their portfolios remain optimized for both growth and risk management.

Ready to optimize your investments? Explore our Index Rebalancing Guide to take advantage of market trends and protect your financial future.