Wall Street Breakfast Podcast: Steel Surges On Tariff Hike

Steel stocks, including Cleveland-Cliffs (CLF), Nucor (NUE), and Steel Dynamics (STLD), surged after President Trump announced plans to double U.S. steel tariffs to 50%. Morgan Stanley strategists predict a significant weakening of the U.S. dollar, potentially reaching COVID-19 pandemic levels by mid-2026, forecasting a 9% drop in the U.S. Dollar Index (DXY) by mid-next year, while Indivior (INDV) will delist from the London Stock Exchange, maintaining its primary Nasdaq listing to reduce costs, citing that over 80% of its revenue now originates from the U.S.

Analysis

U.S. steel producers experienced a significant premarket surge, with Cleveland-Cliffs (CLF) shares climbing 30% and both Nucor (NUE) and Steel Dynamics (STLD) jumping over 10%, following President Trump's announcement of plans to double U.S. steel tariffs to 50%, effective June 4. This policy shift, aimed at bolstering domestic steel production, protecting American jobs, and ensuring blast furnaces operate at full capacity for at least a decade, is also intended to support US Steel’s (X) proposed $14 billion deal with Nippon Steel by making foreign competition less viable. Concurrently, a bearish outlook for the U.S. dollar is consolidating among Wall Street strategists; Morgan Stanley projects a potential 9% decline in the U.S. Dollar Index (DXY) by mid-2025 from current levels, which are already down approximately 9% year-to-date, with the possibility of reaching lows last seen during the COVID-19 pandemic by mid-2026. This view, citing slowing U.S. growth, is echoed by Nomura and JPMorgan, who also point to fiscal concerns and fading U.S. exceptionalism. In corporate-specific developments, Indivior (INDV) announced its intention to delist from the London Stock Exchange effective July 25, maintaining its primary listing on Nasdaq to reduce operational costs and align with its strategic focus on the U.S. market, where over 80% of its revenue originates and approximately 75% of its recent trading volume occurs. Separately, Moderna (MRNA) shares rose 7% premarket upon receiving FDA approval for its next-generation COVID-19 vaccine, mNEXSPIKE, its third FDA-approved product.

Key Decisions for Investors

• Investors should assess the immediate positive impact on U.S. steel stocks like CLF, NUE, and STLD from the proposed 50% tariff increase, while remaining vigilant for potential international trade repercussions and the long-term sustainability of such protectionist measures.
• Given the strong institutional consensus for U.S. dollar depreciation, as highlighted by Morgan Stanley's forecast of a further 9% DXY drop, portfolio managers should evaluate currency hedging strategies or consider diversifying into G10 currencies like the euro, yen, and Swiss franc, or select emerging market currencies.
• For Indivior (INDV), the consolidation onto Nasdaq is a strategic cost-saving measure reflecting its U.S. revenue dominance (over 80%); shareholders should monitor subsequent impacts on operational efficiency and profitability, particularly as its shares have declined over 60% from 2018 highs.
• Moderna's (MRNA) 7% premarket gain following FDA approval for mNEXSPIKE warrants attention; investors should evaluate this new product's potential contribution to future earnings against the backdrop of the evolving COVID-19 vaccine market and the company's overall pipeline.