Stocks rise, dollar drops after Trump denies tariff policy pullback

By Chibuike Oguh

NEW YORK (Reuters) -Global stocks rose while the U.S. dollar index dropped on Monday after President-elect Donald Trump denied a newspaper report that his incoming administration would likely pursue a less-aggressive tariff policy than he previously threatened.

European stocks and currencies climbed following a Washington Post report earlier on Monday that Trump aides were exploring tariff plans that would be applied to every country but cover only certain sectors deemed critical to national or economic security. That would mark a significant shift from Trump's campaign pledge for broader tariffs.

Trump called the story wrong and "just another example of Fake News" in a social media post.

"I think what this highlights is that it's going to be an interesting year," said Matt Orton, chief market strategist at Raymond James in St. Petersburg, Florida. "In addition to that, which is the key piece of my outlook for 2025, is this idea that we are going to have more volatility events because there's so much uncertainty with respect to policy, politics, inflation, and the path of rates."

The benchmark S&P 500 index and the Nasdaq finished higher, led by gains in communication services, technology and materials equities. The Dow ended lower, dragged down by consumer staples stocks.

The Dow Jones Industrial Average fell 0.06% to 42,706.56, the S&P 500 rose 0.55% to 5,975.38 and the Nasdaq Composite rose 1.24% to 19,864.98.

The pan-European stock index finished up 0.94% at 512.37, near its session high of 513.08. MSCI's gauge of stocks across the globe rose 1.20% to 857.39.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,fell 0.68% to 108.22, with the euro up 0.8% at $1.039.

The Canadian dollar strengthened 0.78% against the U.S. dollar to 1.43 per dollar after Prime Minister Justin Trudeau stepped down as leader of the ruling Liberals after nine years in office.

Yields on long-term Treasury securities, including the benchmark 10-year note and 30-year bond, rose as traders weighed Trump's tariff policy. The 10-year yield rose 1.7 basis points to 4.612%, while the 30-year yield climbed 1.9 basis points to 4.8337%.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1.5 basis points to 4.264%.

Oil prices eased in volatile trade. Brent futures fell 0.3% to settle at $76.30 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 0.5% to settle at $73.56.

Gold prices lost ground as rising U.S. Treasury yields offset a weak U.S. dollar. Spot gold fell 0.1% to $2,636.35 an ounce. U.S. gold futures settled 0.3% lower at $2,647.40.

"We are going through this game where they are going to continue to use trial balloons from other people, giving the president the right to disclaim if he's not happy with the messaging," said Tom Plumb, CEO and lead portfolio manager at Plumb Funds in Madison, Wisconsin.

"We are still in the spot where if you look at the top 11 market-cap companies in the S&P 500, they're expected to have 50% earnings growth."

(Reporting by Chibuike Oguh in New YorkAdditional reporting by Alun John in London and Wayne Cole in SydneyEditing by Rod Nickel, Richard Chang and Matthew Lewis)