U.S. stocks advanced on Thursday as investors reacted to U.S. President Donald Trump's announcement of planned reciprocal tariffs.

The Dow Jones Industrial Average gained over 0.7 percent, adding more than 350 points, while the S&P 500 rose over 1 percent to close at 6,115.06, just shy of its record 6,118.71. The Nasdaq Composite climbed more than 1.5 percent, driven by strong performances from Nvidia and Tesla.

Sector performance was largely positive, with 10 of 11 S&P 500 sectors closing in the green. Materials rose 1.74 percent, followed by Consumer Discretionary at 1.50 percent and Technology at 1.42 percent, leading the gains. Meanwhile, Utilities increased 0.23 percent and Industrials edged up 0.10 percent, posting more modest advances.

Trump signed a memorandum directing his administration to develop a plan for reciprocal tariffs, aiming to match the tariffs that other countries impose on U.S. exports.

The announcement led to a surge in the Dow Jones Industrial Average, as investors anticipated potential benefits for domestic industries. Additionally, Trump suggested that further tariffs, including those on auto imports, could be forthcoming, indicating a more aggressive stance on trade policy in the near future.

Meanwhile, the Producer Price Index (PPI) for final demand increased by 0.4 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported on Thursday.

The 10-year Treasury yield fell after the inflation data and was recently down about 10 basis points to 4.535 percent, as of 4:36 p.m. Eastern Time.

"The components that feed into PCE is, I think, where we're getting the celebration today. That's helping bring yields down a little bit as well," said Adam Turnquist, chief technical strategist at LPL Financial.

"We're watching 4.5 percent as the line in the sand for this upturn that's been in place since September. A break below that would be a welcome sign for equity markets," he added.

The U.S. labor market continued to exhibit resilience, as evidenced by a decline in initial jobless claims. For the week ending Feb. 8, applications for unemployment benefits decreased by 7,000 to a seasonally adjusted 213,000, surpassing analysts' expectations of 215,000.

In January, the United States added 143,000 jobs, and the unemployment rate fell to 4 percent. However, the labor market's strength is juxtaposed with recent announcements of workforce reductions by major corporations. Meta Platforms, for instance, has initiated company-wide layoffs affecting approximately 5 percent of its workforce, targeting what it identifies as its "lowest performers." Similarly, companies like Workday, Dow, CNN, and Starbucks have also announced job cuts in 2025.

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