Stocks swiftly recovered from the DeepSeek-driven sell-off early in the week but came under pressure on Friday amid concerns over President Trump’s tariff plans.
Trump followed through with his plans on Saturday, placing tariffs on Canada, Mexico and China, which will be fully in force by Tuesday, Feb. 4. There will be 25% duties on Canada and Mexico and 10% on China over issues of fentanyl and illegal migration.
Stocks will be digesting the tariffs announcements after a strong start to the year. In January, the S&P 500 (^GSPC) rose 2.7% while the Nasdaq Composite (^IXIC) rose more than 1.6%. The Dow Jones Industrial Average (^DJI) led the gains, rising 4.7%.
In the week ahead, investors will parse the latest developments in Trump’s tariff strategy, the January jobs report, and an onslaught of corporate reports. Updates on job openings, as well as activity in the services and manufacturing sectors, will also be on the schedule.
Meanwhile, quarterly results from Amazon (AMZN), Alphabet (GOOGL,GOOG), Chipotle (CMG), and Eli Lilly (LLY) headline a week that will feature earnings reports from 131 S&P 500 companies.
Tariff reaction will be at the forefront of the market narrative in the week ahead. The duties on all three countries will be fully in force by Tuesday, February 4th, according to the order signed by Trump Saturday afternoon in Florida. Many economists have argued that tariffs could stoke inflation.
As Yahoo Finance’s Ben Werschkul reported, Canada, Mexico, and China were expected to quickly announce retaliatory measures across a range of goods. Indeed, on Saturday, Canadian Prime Minister Justin Trudeau said Canada will place 25% counter-tariffs on CAD $155 billion (USD $107 billion) worth of American-made products, starting Tuesday
A stock market rally cooled off to end the week as White House press secretary Karoline Leavitt on Friday afternoon outlined the plans for imposing tariffs.
This set the stage for what could come from the market as investors digest Trump’s tariff promises coming to fruition.
Evercore ISI chief strategist for international affairs and public policy Sarah Bianci told Yahoo Finance Trump’s tariffs would “grab the market’s attention.” Bianchi added that Trump following through with the extent of tariffs he had initially threatened “may be further” than market participants had been expecting to this point.
The Federal Reserve held interest rates steady on Wednesday as it waits for further clarity on inflation’s path toward its 2% target and how potential tariffs could impact that process.
