A pneumatic fastener driving tool is configured to drive a threaded fastener using both linear and rotational motion. The tool allows a fastener to first be driven linearly, without rotation, through a surface material and into a substrate material, preferably to a depth that causes the fastener to at least pierce the substrate material. The tool then rotates the threaded fastener and causes it to fully engage the substrate material, thereby fastening the surface material to the substrate material. The tool has sufficient linear force to drive a fastener into relatively hard substrate materials, such as steel studs, and has a stationary air motor assembly to reduce recoil generated during the driving process. The tool further comprises a gear reducer assembly that uses a compound planetary gear in order to reduce the overall length of the tool.