Wall Street begins Trump's second term with gains

NEW YORK (AP) — U.S. stocks rose Tuesday after more companies said they made bigger profits at the end of last year than analysts expected and as Treasury yields eased.

The S&P 500 climbed 0.9%, while many markets around the world took only tentative steps following Donald Trump’s return to the White House on Monday. The Dow Jones Industrial Average rose 538 points, or 1.2%, and the Nasdaq composite added 0.6%.

Trump has promised sweeping moves to reshape global trade and the economy, often at the expense of other countries, but most stock indexes in Asia and Europe made only modest moves. In the bond market, U.S. Treasury yields gave back some of their big recent gains that had cranked up the pressure on stock markets worldwide, while bitcoin pulled back from its record set the day before.

In the foreign-currency market, the values of both the Mexican peso and Canadian dollar fell against the U.S. dollar after Trump said he expects to put 25% tariffs on Canada and Mexico starting on Feb. 1. Trump had threatened even stiffer tariffs on Chinese imports during his campaign, but he said Monday he wanted to have more discussions with the leader of the world’s second-largest economy.

The threat of widespread tariffs, along with the possibility of other policies that could swell the U.S. government’s debt, had helped send Treasury yields higher recently, which in turn knocked down stock prices. To make up for such downward pressure, companies need to deliver stronger earnings growth to support their stock prices.

Charles Schwab did just that on Tuesday and rose 5.9% after delivering a better profit report for the end of 2024 than analysts expected. It credited clients pouring more in dollars, as its total client assets rose 19% from a year earlier to $10.10 trillion.

3M climbed 4.2% after reporting profit and revenue for the end of 2024 that edged past analysts’ expectations The company behind Scotch tape and Command strips also gave forecasts for financial results in 2025 that were roughly in line with analysts’ expectations.

This earnings reporting season is still in its early days, but S&P 500 companies have so far been beating analysts’ expectations for earnings by double the rate they were doing at this time three months ago, according to Bank of America strategists Ohsung Kwon and Savita Subramanian.

Moderna also rose 5.4% after saying it received $590 million in total awards from the U.S. government for the continued development of flu vaccines. Oracle rallied 7.2% ahead of an expected announcement by Trump on investments in artificial-intelligence infrastructure involving the tech giant, OpenAI and SoftBank.

Such gains helped offset a 9.2% drop for Walgreen Boots Alliance. The U.S. Justice Department accused Walgreens late Friday of filling millions of prescriptions without a legitimate purpose, including for dangerous amounts of opioids. In the lawsuit, the government says the drugstore chain’s pharmacists filled controlled substance prescriptions with clear red flags that indicated they were highly likely to be unlawful.

Walgreens, one of the country’s largest pharmacy chains with over 8,000 locations, said in a statement that it stands behind its pharmacists and “will not stand by and allow the government to put our pharmacists in a no-win situation, trying to comply with “rules” that simply do not exist.”

All told, the S&P 500 added 52.58 points to 6,049.24. The Dow Jones Industrial Average gained 537.98 to 44,025.81, and the Nasdaq composite rose 126.58 to 19,756.78.

In the bond market, Treasury yields eased to give back some of the big gains they’d made in recent months on worries about inflation remaining difficult to fully subdue.

The yield on the 10-year Treasury fell to 4.56% from 4.62% late Friday. Like the U.S. stock market, bond trading had been closed on Monday in observance of Martin Luther King Jr. Day.

The 10-year Treasury yield has been regressing since an encouraging update on inflation last week, but it’s still well above where it was in September, when it was below 3.65%.

Morgan Stanley strategist Michael Wilson said the movements for such longer-term interest rates appear to be the main driver for the overall U.S. stock market. He expects the pattern to continue, where stocks drop when yields rise and vice-versa, at least until the 10-year Treasury yield falls below 4.50% on a sustainable basis, among other things.

In stock markets abroad, indexes rose slightly across Europe after finishing mixed in Asia.

Hong Kong’s Hang Seng index rose 0.9% after embattled Chinese property developer Country Garden got a reprieve on its deadline for working out an agreement with its creditors.

In the cryptocurrency market, which has surged amid hopes Trump will make Washington friendlier to the industry, bitcoin pulled back from its record above $109,000 set on Monday and was sitting just above $106,000.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.