It has been a little over a month since President Trump returned to office for his second term. In these few weeks, the commander in chief has laid the groundwork for this new administration through a flurry of executive orders, tariffs, and changes to the shape of the federal government thanks to Elon Musk and the Department of Government Efficiency, among others. With the tax cut bill getting approved by the House earlier this week, tariff implementation starting in the next few weeks, and DOGE working to cut $1T in savings, how is the market reacting? We get into it.
This week on Capitol Gains, anchor Madison Mills and Senior Columnist Rick Newman talk about the latest coming from Washington D.C. and how the market has responded since President Trump returned to the White House.
“The market is incredibly obsessed with corporate tax cuts, particularly because year to date we’ve seen a lack of strong conviction in the market, and earnings estimates are moving sideways,” Mills says. “This idea that earnings from companies - we’ve gotten used to them just growing so exponentially - and now we’re just getting your average run-of-the-mill beats when it comes to earnings.”
the market is incredibly obsessed with the idea of corporate tax cuts, particularly because year-to-date we've seen a lack of strong conviction in the market and earnings estimates are moving sideways. So, uh, forgive me if I'm getting a little bit too wordy there, but it's basically this idea that earnings from companies we've gotten used to them just growing so exponentially, and now we're just getting your average run-of-the-mill beats when it comes to earnings. And we saw this in Nvidia that had an incredible amazing quarter yet again, but the the earnings estimates were just so sky high that the company wasn't necessarily able to wow Wall Street. What's interesting though is after Nvidia earnings we did see a move to the upside in the stock, and then it started to reverse this morning and take the rest of the big tech names with it. And then the only headline that I was able to tie that back to and confirmed with a source of mine is this announcement from President Trump that China is going to charge an additional 10% tariff starting March 4th, and then he reiterated those Mexico Canada Mexico and Canada tariffs as well. So, it it's interesting that those two headlines are potentially what's weighing on Nvidia stock given what we know about uh the market largely ignoring some of these tariff headlines, but perhaps uh this morning that's not necessarily the case when it comes to Nvidia and a little bit of the risks coming up.
Well, Maddie, let me I mean, let me just add at a simpler level. I mean, the overall stock market has not gone up, uh, I believe since Trump took office. I mean, there was a little bit of a there was a nice rise after the election, but the S&P 500 has basically flatlined. I think it's actually down a little bit since Trump took office. I mean, what seems to be going on is Trump is giving markets all the bad news first, um, which is tariffs, deporting migrant workers, uh, and whatever dodge is up to. We're we're getting all the bad stuff now, and what markets want, what's going to be the upward uh trajectory stuff is tax cuts and deregulation, but that's coming later. Uh, Goldman Sachs put out a note uh this week saying, we still think markets are underpricing the tariff risks, uh which means that they're kind of blowing them off. They're kind of saying, yeah, we know Trump is threatening these tariffs. We don't think he's actually going to do it. Um he is doing it. It's it's happening slowly, but it is happening as we saw with China. Started with 10%, now we have another 10%. I mean, how high is he going to go?
Yeah.
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Newman takes a more broad approach to the subject at hand. “The overall stock market has not gone up since Trump took office. There was a little bit of a rise after the election, but the S&P 500 has basically flatlined,” Newman says. “What seems to be going on is Trump is giving markets all the bad news first, which is tariffs, deporting migrant workers, and whatever DOGE is up to. We’re getting all the bad stuff now and what markets want, what’s going to be the upward trajectory stuff, is tax cuts and deregulation.”
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Capitol Gains is Yahoo Finance’s unique look at how US government policy will impact your bottom line long after the Presidential election polls have closed.
This post was written by Lauren Pokedoff.