Stocks Bounce and Dollar Slips After Tariff Report: Markets Wrap

(Bloomberg) — World stocks rose and the dollar slipped after a report that President-elect Donald Trump’s incoming economic team is considering a gradual ramp-up in trade tariffs in a strategy that could avert inflation spikes.

US equity futures ceded some of their earlier sharp gains, but contracts on the Nasdaq 100 remained 0.4% higher, putting the underlying index on track to snap a two-day run of losses. Bloomberg News reported that graduated tariff hikes of about 2% to 5% a month are under discussion, rather than aggressive one-time increases. 

S&P 500 contracts gained 0.3%, while most of the so-called Magnificent Seven tech shares advanced in premarket trading. 

“A slower and steadier tariff approach would perhaps remove a degree of upside inflation risk and a degree of downside growth risk, so everyone is getting cautiously optimistic again,” said Michael Brown, a strategist at Pepperstone Group Ltd. 

The report knocked the dollar index lower after five straight days of gains, while global bond markets steadied after a sharp run-up in borrowing costs in recent days. However, an earlier drop in 10-year Treasury yields subsided, keeping borrowing costs near the October 2023 highs hit Monday after traders slashed bets on Federal Reserve interest-rate cuts. 

Brown noted that Trump has previously dismissed any suggestions of a more moderate tariff strategy. “That’s perhaps why we are seeing some of the initial optimism fade a little bit,” he said. 

In Europe, the Stoxx 600 index gained 0.6%, led by autos — the sector seen as most vulnerable to tariff hikes.

Inflation Report

The latest word on tariffs comes at a time when markets are increasingly fearful of an inflation resurgence that prevents central banks, especially the Fed, from cutting rates as much as expected earlier. Policies espoused by Trump, including mass deportations and higher trade levies, have fanned such concerns. 

That makes this week’s US inflation data all the more crucial, especially if it signals the disinflation trajectory had already stalled at the end of last year. Producer inflation is due later Tuesday, followed by a CPI report on Wednesday, and December retail sales numbers that could confirm robust holiday-season spending. 

Focus is also turning to the US corporate earnings season, with banks including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. reporting on Wednesday. Fourth-quarter earnings-per-share on the S&P 500 is expected to climb 7.3% from the year-earlier period, according to data compiled by Bloomberg Intelligence.

Recent losses on the S&P 500 have wiped out its 2025 gains, with sentiment also hurt by the prospect of sweeping new limits on the sale of advanced AI chips by Nvidia Corp. and its peers. 

“There’s been a swing back from the exuberance of the Trump election,” said Raphael Thuin, head of capital market strategies at Tikehau Capital in Paris. “The market is hoping for the upcoming earnings season to provide some reassurance.” 

Key events this week:

• US PPI, Tuesday
• Fed’s John Williams and Jeffrey Schmid speak, Tuesday
• Eurozone industrial production, Wednesday
• Citigroup, JPMorgan, Goldman Sachs, BNY, Wells Fargo and BlackRock earnings, Wednesday
• US CPI, Empire manufacturing, Wednesday
• Fed’s John Williams, Tom Barkin, Austan Goolsbee and Neel Kashkari speak, Wednesday
• TSMC earnings, Thursday
• ECB releases account of December policy meeting, Thursday
• Bank of America, Morgan Stanley earnings, Thursday
• US initial jobless claims, retail sales, import prices, Thursday
• China GDP, property prices, retail sales, industrial production, Friday
• Eurozone CPI, Friday
• US housing starts, industrial production, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.3% as of 7:09 a.m. New York time
• Nasdaq 100 futures rose 0.4%
• Futures on the Dow Jones Industrial Average rose 0.2%
• The Stoxx Europe 600 rose 0.4%
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro was little changed at $1.0249
• The British pound fell 0.3% to $1.2170
• The Japanese yen fell 0.4% to 158.06 per dollar

Cryptocurrencies

• Bitcoin rose 2.2% to $96,289.01
• Ether rose 2.9% to $3,205.2

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.79%
• Germany’s 10-year yield advanced two basis points to 2.63%
• Britain’s 10-year yield was little changed at 4.89%

Commodities

• West Texas Intermediate crude fell 0.4% to $78.52 a barrel
• Spot gold rose 0.2% to $2,668.37 an ounce

This story was produced with the assistance of Bloomberg Automation.

 

–With assistance from Aya Wagatsuma and Margaryta Kirakosian.

©2025 Bloomberg L.P.