T&G Market Recap: Dow, S&P 500 Fall, Nasdaq Shrinks as Tariff News Dominates šš„
Trump's tariff threat clouds market optimism, overshadowing solid earnings from Big Tech š¼
US stocks faced a setback on Friday, as tariff news from the White House triggered concerns about a potential trade war with Mexico, Canada, and China.
The Dow lost 0.75%, while S&P 500 shed 0.50%.
Nasdaq managed to stay slightly positive, but it gave up earlier gains, rising just 0.25%.
The stock market had started the day with optimism, buoyed by strong earnings from Apple (AAPL) and a positive inflation reading that matched expectations. However, as President Trump confirmed that tariffs on Mexico and Canada would go into effect on Saturday, market sentiment shifted negatively.
Trump's Tariff Announcement: A Fresh Wave of Uncertainty šØ
The looming tariff deadline reignited fears about the impact on the economy from potential trade tensions with major trading partners. According to White House Press Secretary Karoline Leavitt, tariffs will be imposed as follows:
25% tariffs on Mexico and Canada.
10% tariff on China.
This announcement led to a spike in the US Dollar (DX-Y.NYB), and raised concerns about inflation, prompting Federal Reserve Chair Jerome Powell to maintain a cautious, wait-and-see approach. Markets are now focused on how these tariffs will affect inflation and interest rate decisions.
Apple's Earnings: Strong, But Concerns Remain š
Apple (AAPL) reported solid earnings, but some key issues are still weighing on the stock:
The company beat earnings expectations but iPhone sales underperformed, particularly in China.
Despite the AI-driven supercycle predictions, Apple's AI updates didn't spark the expected upgrade cycle.
Apple shares rose 2% in morning trading, driven by optimistic outlooks from investors regarding revenue growth.
While Apple showed resilience, China sales were down 11% year-on-year, which is a key concern moving forward. Some analysts warn of a slower recovery in the region and express doubts about a major AI-driven transformation in the near term.
The Fedās Inflation Gauge: PCE in Line with Expectations š
The latest reading of the Personal Consumption Expenditures (PCE) index, the Fed's preferred measure of inflation, showed a year-over-year increase of 2.8%, in line with economist expectations.
This core PCE reading excludes food and energy and provides insight into long-term inflation trends.
On a monthly basis, PCE rose by 0.2%, matching forecasts.
Inflation remains above the Fed's 2% target, which is keeping rate-cut expectations in check.
Traders are still pricing in a rate cut in June, with the CME FedWatch tool showing nearly 70% probability for a cut at that meeting.
Gold Prices Rise Amid Trade Tension š°
As concerns about tariffs and the potential for a trade war mounted, gold prices surged, reaching new highs.
Gold futures rose past $2,860 per ounce, continuing a strong rally driven by global economic uncertainty.
Goldman Sachs analysts reiterated their bullish call on gold, seeing it as a hedge against geopolitical and inflation risks.
With tariffs adding another layer of uncertainty, investors are flocking to gold as a safe haven, continuing a positive trend that has lasted for weeks.
Whatās Next? Economic Data and Big Tech Earnings Loom š®
Investors are bracing for more economic news and earnings reports next week. The January jobs report will be crucial for the Fedās next steps.
Google and Amazon are up next with their earnings reports, and investors will be keen to see how theyāre adapting to the growing AI landscape, especially in light of the DeepSeek AI model from China.
The upcoming jobs report will likely influence the Fedās decision on interest rates, with any major shifts in the labor market potentially altering the course for rate cuts.
Other Notable Moves š
Tesla (TSLA) investors remain skeptical about CEO Elon Muskās promises of robotaxis despite a 1% rise in stock value.
Deckers Outdoor (DECK) stock fell 14% after weak guidance for fiscal 2025, despite strong sales from HOKA and UGG brands.
Nvidia (NVDA) stock is down 4%, following fears of DeepSeekās cheaper AI model and tightening export controls by the Trump administration.
Conclusion: Tariffs, Earnings, and Fed Policy in Focus š
As tariffs set to take effect Saturday, the stock market is facing a volatile period. While Apple and other tech giants continue to show resilience, the trade war fears and uncertainty over interest rates are overshadowing optimism.
Gold is rising as a safe-haven asset, and US Dollar continues to strengthen.
Investors will closely monitor tech earnings next week and the jobs report to gauge the economic trajectory and potential rate cuts.
Stay tuned for the next round of earnings and economic data, which could offer further clarity in these uncertain times.