In a surprising turn of events, the United States' economic indicators for the fourth quarter and January have surpassed expectations, providing a boost to the stock market despite renewed tariff threats. The US Gross Domestic Product (GDP) grew by 2.4% quarter-on-quarter in Q4, exceeding the anticipated 2.2%. Additionally, Durable Goods Orders soared by 3.1% month-on-month in January, outpacing the forecasted 2.0%. These positive developments contributed to the Dow Jones Industrial Average rising by approximately 400 points at its peak on Thursday.
UnitedHealth Group and 3M were among the key contributors to the Dow's gains. UnitedHealth saw a 1.65% increase, pushing its share price above $471 and adding eight points to the index. Meanwhile, 3M's stock climbed by 3%, surpassing $151 per share. These gains came despite US President Donald Trump's renewed threats to impose a 25% tariff package on Canada and Mexico.
Investors, however, have grown accustomed to the Trump administration's tendency to pivot from its own schedules at the last minute. Early on Thursday, President Trump reversed his timeline for implementing new tariffs, adding another layer of uncertainty to the market. This decision comes ahead of the release of the US Personal Consumption Expenditure Price Index (PCEPI) inflation data set for Friday.
The Quarterly Core PCE, a preview of Friday’s main inflation print, accelerated to 2.7%, surpassing the expected hold at 2.5%. Economists suggest that inflation likely eased in February, especially in France, due to a significant reduction in regulated electricity prices.
The Dow Jones chart continues to exhibit a near-term consolidation pattern, with price action constrained just below the 50-day Exponential Moving Average (EMA) close to 43,885. Technical traders are on the lookout for opportunities to re-enter bullish positions as technical oscillators show signs of recovery from oversold conditions.
Meanwhile, a strong tariff-driven upswing in the US Dollar is putting pressure on the Euro, leading to deeper daily losses for the EUR/USD pair. The robust performance of the dollar is largely attributed to investor sentiment surrounding potential tariff implementations and their impact on international trade dynamics.