Dow gains 500 points, stocks close near records as Trump maintains tariffs

the US dollar (DX = F, DX-Y.NYB) has been volatile since Donald Trump’s inauguration, retreating from near two-year highs as the president failed to enact broad-based tariffs on his first day in office.

The move surprised investors as an emergency order would have allowed immediate rate increases in contrast to the alternative process of investigations, which is likely to take more time to complete.

However, the dollar recovered about half of its losses after the president said later that tariffs on Mexico and Canada could be imposed from February 1. issued a memorandum directing federal agencies to evaluate U.S. trade policy, which could eventually lead to blanket tariffs on a variety of trading partners.

Mohamed El-Erian, Allianz’s chief economic adviser, told Yahoo Finance’s Morning Brief program that the dollar’s gains and losses signal a new normal for markets.

“The message is that this is not a one-day event,” he said, noting that risks exist both at the height and at the crash. “This is something that stays with us.”

At that point, Morgan Stanley strategist Michael Zezas and economist Michael Gapen said in a note Tuesday that Trump’s rhetoric “reminds us that vigilance is warranted as the path of US policy could evolve quickly.” The team maintained its position that any political adjustments will not be felt until the middle of the year.

The greenback’s recent price action has largely been driven by two main catalysts: the election of Trump and the subsequent Republican sweep, along with the recalibration of future Fed easing in the face of strong economic data.

After hitting a September low, the US Dollar Index (DX-Y.NYB), which measures the value of the dollar in relation to a basket of six foreign currencies (the euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish krona and the Swiss franc), gained almost 10%. Since the election, it has risen by about 5%.