T&G Weekly Outlook Report: Trump Tariffs, Big Tech Earnings, and Jobs Report📉

Stocks face pressure from tariff news, while a wave of corporate earnings and economic data shape the outlook 📉

Market Recap: Tariffs and Earnings Keep Investors on Edge

Stocks took a hit on Friday after President Trump followed through on his tariff plan, imposing duties on Canada, Mexico, and China.

• S&P 500 down 0.5%

• Dow Jones lost 0.75%

• Nasdaq Composite fell 0.28%, but remained positive earlier in the session.

Despite a strong start to the year with January gains (S&P 500 +2.7%, Nasdaq +1.6%, and Dow +4.7%), tariff concerns dominated Friday’s trading session. The White House confirmed 25% tariffs on Mexico and Canada, and 10% on China, set to take effect by February 4.

These tariffs, focusing on fentanyl and illegal migration, revived concerns about a potential trade war, as retaliatory measures from affected countries are expected. This development overshadowed positive earnings from Apple and the inflation report that met expectations.

Tariff Impact: Markets React to Growing Uncertainty

As tariffs on Mexico, Canada, and China are implemented, economists are warning that they could stoke inflation.

• Canada plans 25% counter-tariffs on $107 billion worth of US products starting Tuesday.

• Mexico and China are expected to follow suit with retaliatory measures.

The market is now adjusting to the reality of tariffs impacting US trade relations. According to Sarah Bianchi from Evercore ISI, these tariffs will definitely grab the market's attention. As tariffs go into effect, markets will face increased volatility, especially with trade policy hanging over the outlook.

The Fed: Inflation and Jobs Report in Focus

The Federal Reserve held interest rates steady as it waits for more clarity on inflation and the impact of tariffs. With inflation remaining above the 2% target, there’s growing pressure to assess how these new tariffs could influence economic trends.

In the week ahead, investors will watch closely as several economic reports hit the market:

• January Jobs Report (Friday): Expected to show 150,000 new jobs with the unemployment rate holding steady at 4.1%.

• Employment data revisions and job openings reports will also provide insights into labor market trends.

While inflation is inching toward the Fed’s target, the potential slowdown in jobs could prompt rate cuts if the unemployment rate increases significantly, a key metric for the central bank.

Corporate Earnings: Amazon, Alphabet, and More to Report

This week, Big Tech earnings reports will continue to shape the market outlook. 131 S&P 500 companies are slated to report, including:

• Amazon (AMZN)

• Alphabet (GOOGL)

• Chipotle (CMG)

• Eli Lilly (LLY)

This earnings season has been strong so far, with S&P 500 earnings expected to rise 13.2% year-over-year. Despite the noise around tariffs, companies that beat earnings expectations are seeing stock prices rise by an average of 1.5%. For example, Meta and Apple have had mixed results, but solid earnings have helped maintain market optimism.

ISM Manufacturing and Potential Tailwinds for Stocks

The ISM Manufacturing PMI report, coming out Monday, could provide bullish momentum if the index shows growth.

• Manufacturing PMI is expected to rise above 50, indicating growth after more than two years of contraction.

• Bank of America predicts that manufacturing could break out of recession, which would likely provide a boost to stock earnings.

A rise in manufacturing activity often leads to increased earnings, and cyclical growth is expected to accelerate in 2025.

Weekly Calendar of Key Events 📅

Monday

• Economic Data:

  • S&P Global US Manufacturing PMI (50.1 expected)

  • Construction Spending (0.2% expected)

  • ISM Manufacturing Index (49.3 expected)

• Earnings:

  • The Clorox Company (CLX)

  • Palantir (PLTR)

  • Tyson (TSN)

Tuesday

• Economic Data:

  • Job Openings (8.01 million expected)

  • Factory Orders (0.5% expected)

  • Durable Goods Orders (-2.2% expected)

• Earnings:

  • Alphabet (GOOGL)

  • Chipotle (CMG)

  • Merck (MRK)

  • PepsiCo (PEP)

  • PayPal (PYPL)

Wednesday

• Economic Data:

  • ADP Private Payrolls (153,000 expected)

  • ISM Services Index (54.5 expected)

• Earnings:

  • Disney (DIS)

  • Uber (UBER)

  • Ford (F)

  • Novo Nordisk (NVO)

Thursday

• Economic Data:

  • Initial Jobless Claims (207,000 expected)

• Earnings:

  • Amazon (AMZN)

  • Eli Lilly (LLY)

  • Hershey (HSY)

  • Pinterest (PINS)

Friday

• Economic Data:

  • Nonfarm Payrolls (+150,000 expected)

  • Unemployment Rate (4.1% expected)

  • Average Hourly Earnings (+0.3% expected)

• Earnings:

  • Canopy Growth (CGC)

  • Newell Brands (NWL)

Conclusion: Tariffs, Earnings, and Jobs Report Ahead

This week, the market is navigating a new chapter in tariff negotiations that could influence inflation and growth. Meanwhile, earnings season continues with results from major players like Amazon, Alphabet, and Chipotle. The January jobs report will also provide insight into the labor market, which remains a critical focus for the Federal Reserve.

Stay tuned for more updates as economic data and corporate earnings unfold throughout the week.