Dow Jones rises 450 points as market digests new Trump administration

Key points

• The Dow Jones Industrial Average rose some 450 points on Tuesday.

• It was the first full day of the second Trump Administration.

• 3M and UnitedHealth led the Dow surge.

A solid earnings report from 3M also lifted the Dow.

The Dow Jones Industrial Average jumped more than 450 points on Tuesday, or about 1%, on the first day of the second Trump Administration.

The S&P 500 and Nasdaq posted more muted gains, as of mid-afternoon. The large-cap benchmark was up about 50 points, or 0.8%, while the Nasdaq rose 142 points, or 0.7%. The small cap Russell 2000 outperformed all, rising 39 points or 1.7%.

The Dow’s gains were spurred by strong earnings reports and big moves among the Dow 30. However, the new Trump Administration and its initial actions – and at least one notable inaction – also impacted markets.

No new tariffs? At least not yet

There seemed to be a collective sigh of relief that President Donald Trump did not impose new tariffs on trade partners Canada, Mexico, and China, among others, on day one, as he said on the campaign trail. Many economists believe that implementing more and higher tariffs will slow economic growth and increase inflation.

However, while no new tariffs were announced on day one, Trump did say that his administration expects to deploy 25% tariffs on Mexico and Canada on February 1, reported the Associated Press.

The president was less committal on hiking the tariffs on Chinese imports. “We’re going to have meetings and calls with President Xi,” Trump said, reported the AP.

He was also non-committal on the idea of imposing universal tariffs.

“We’re not ready for that just yet,” Trump said, reported Reuters. However, he added that “we may … because essentially countries take advantage of the U.S.”

Trump made a slew of executive actions, including revoking 78 Biden Administration executive orders. Some of them dealt with diversity, equity and inclusion, climate change, and the risks of artificial intelligence. Trump also revoked Bidenʻs executive action to lower prescription drug costs.

There were also actions to end work-from-home for federal employees, freeze federal hiring, create emergency price relief, pardon the January 6 rioters, and withdraw the U.S. from the Paris Agreement and other climate accords.

Trump also made orders to revoke 12 Biden-era actions related to clean energy initiatives and immediately pause the disbursement of funds from the Inflation Reduction Act. In addition, he declared a national energy emergency to lower energy costs and increase oil and natural gas production. At the same time, he put a pause on certain wind projects. Among others, Trump withdrew the United States from the World Health Organization and declared a national emergency at the southern border.

These initial actions will be a lot for the market to digest, particularly over the coming weeks and months as their impacts take hold.

UnitedHealth and 3M lift Dow

In the price-weighted Dow Jones Industrial Average, UnitedHealth has a lot of influence on price movements as the second highest price stock in the index. In December, UnitedHealth stock plummeted following the Brian Thompson tragedy, and the Dow struggled along with it.

But on Tuesday, UnitedHealth stock rose about 3% after analysts at Bernstein called it a top pick for 2025. Bernstein cited its relatively cheap valuation and its achievable outlook. Also, analysts at Baird said they were more optimistic than cautious about UnitedHealth’s prospects.

Another Dow stock, 3M (NYSE: MMM), also had a good day, rising more than 5% after reporting strong fourth quarter earnings. The turnaround for 3M continues as the company boosted earnings by 17% and beat estimates.

The outlook for 2025 is also positive, which fueled 3Mʻs gains on Tuesday. The industrial firm calls for adjusted total sales growth of 0.5% to 1.5% and adjusted organic sales growth of 2% to 3%. In addition, 3M also targets the adjusted EPS in the range of $7.60 to $7.90, up from $7.30 in 2024.

Further, it guided for adjusted operating cash flow of $5.2 billion to $5.3 billion, contributing to approximately 100 percent adjusted free cash flow conversion.

3M has a median price target of $158 per share, suggesting a 6% increase.