As of the time of publication, the three major indexes are weakly fluctuating, with the S&P 500 Index down 0.2%, the Nasdaq down 0.24%, and the Dow down 0.2%.

On Tuesday, US stock investors are closely watching Federal Reserve Chairman Powell's testimony to Congress.

Powell will testify on Tuesday before the Senate Banking Committee and on Wednesday before the House Financial Services Committee. Both hearings will start at 10 AM Eastern Time.

The timing of Powell's testimony coincides with turmoil in Washington, where President Trump has reiterated tariffs on all US trading partners, and the government has sent mixed messages about the Federal Reserve.

On Monday, Trump signed an executive order to impose new tariffs on all steel and aluminum imported to the USA, including from major suppliers Mexico and Canada, which has driven up the stock prices of United States Steel manufacturers. Trump previously stated that he would announce reciprocal tariffs on countries imposing tariffs on US imports this week.

The European Union responded by stating that if the USA imposes tariffs on products from the EU, it will retaliate with its own tariffs. The EU has prepared several lists of US products, and if Trump continues to impose tariffs, the EU will impose retaliatory tariffs on these items.

In a statement on Tuesday, European Commission President von der Leyen said: "I deeply regret the USA's decision to impose tariffs on European steel and aluminum exports. Unreasonable tariffs on the EU will not go unanswered - they will trigger firm and corresponding countermeasures."

In a speech on Tuesday, German Chancellor Scholz stated that if the USA "leaves us no choice, then the EU will respond as a whole. As the largest market in the world with a population of 0.45 billion, we have the capacity to do so."

George Lagarias, chief economist at Forvis Mazars, stated: "The market believes that Trump's tariff threats are a bargaining tactic, so they are waiting for the actual effects of the tariffs. I think they are waiting for the smoke to clear."

Ian Lyngen, head of US interest rate strategy at BMO, stated: "The true impact of the new tariffs announced is difficult to estimate, and furthermore, the consequences of additional tariffs in the short term are even harder to predict."

He said that Powell "will undoubtedly be asked about the potential impacts of Trump's first round of tariffs, as well as any more tariffs that may be introduced in the future. We suspect that the market will most want him to clarify whether the one-time price increases caused by Trump's tariffs so far will prompt any response from the FOMC."

Shortly after Trump took office, he expressed a desire to lower interest rates. However, last week, US Treasury Secretary Scott Bessent stated that the White House would not pressure the Federal Reserve or request it to lower the benchmark borrowing rate, but instead expects 10-year US Treasury yields to decrease while the government relaxes regulations and cuts spending to control inflation.

Elisabet Kopelman, an economist at Nordea Bank, stated: "Powell's remarks at the January meeting indicate that as long as the economy remains strong, the Federal Reserve will not rush to cut rates further, and we believe he is unlikely to change this position."

Surveys show that in the face of rising inflation threats, economists expect the Federal Reserve to wait until next quarter to cut rates again, whereas previously they expected the Federal Reserve to cut rates in March.

Since Trump won the US election last November, economists have raised their inflation forecasts because they are concerned that Trump's policies—especially tariff policies—may rekindle price pressures in the economy.

After a cumulative interest rate cut of 100 basis points from September to December last year, Federal Reserve officials, including Chairman Powell, recently stated that they are "not in a hurry" to lower interest rates further.

Due to a strong job market and robust consumer spending, many economists believe that the USA economy is in a favorable position with little need to lower interest rates. So far, new tariff news has emerged weekly.

Later this week, investors will receive new inflation data: the latest Consumer Price Index (CPI) report on Wednesday, and the Producer Price Index (PPI) report on Thursday.

On Tuesday's economic data front, as businesses weigh the policies of the Trump administration and the Federal Reserve pauses interest rate cuts, optimism among small businesses in the USA fell from a more than six-year high in January, with an uncertainty index rising.

The National Federation of Independent Business (NFIB) optimism index fell by 2.3 points last month to 102.8. Seven out of ten categorical indices declined, with the capital expenditure plans index experiencing the largest monthly decline since 1995.

The uncertainty index surged by 14 points, marking the largest monthly increase since 1986. This index reached the third highest historical level, indicating that as the Federal Reserve slows down interest rate cuts and USA President Donald Trump begins to push forward tariff measures, businesses are becoming more cautious about investments.

This somewhat reversed the sharp downward trend of the uncertainty index seen in the previous two months, as Trump's election victory provided businesses with clearer prospects, thereby boosting the overall optimism index to its highest level since 2018.

Focus on individual stocks

AI application stocks show mixed performance, $Tempus AI (TEM.US)$up over 9%, $Adobe (ADBE.US)$、 $Palantir (PLTR.US)$、 $monday.com (MNDY.US)$Increase by 1%.

China Concept Stocks generally fell. $GDS Holdings (GDS.US)$In contrast, it rose nearly 15%.$Alibaba (BABA.US)$Increased by more than 1%.

$Hesai (HSAI.US)$An increase of over 6%, with$BYD COMPANY (01211.HK)$Supercharging has established a partnership: more than ten models equipped with Lidar will enter mass production in 2025.

$Coca-Cola (KO.US)$ After the earnings report, the stock rose over 4%, and the company's Q4 performance exceeded expectations.

$Lattice Semiconductor (LSCC.US)$The stock rose over 12%, with the company's fourth-quarter revenue at 0.1174 billion USD, slightly above market expectations.

Editor/ping