Markets Slip Amid Tariff Turmoil

The Major Markets ended mostly lower last week. The week began with news from over the weekend that President Trump had issued tariffs on China, Canada, and Mexico on February 1st. This included a 10% tariff on Chinese Products and Canadian Energy products, along with a 25% tariff on all other Canadian products and all Mexican Products. Furthermore, the tariffs were no longer eligible for de minimis exclusion. 

These tariffs were designed to provoke the impacted countries to curb the flow of illegal drugs and immigration across their boarders.  

This event led to a sell off in the markets at the open Monday. However, as the day progressed, it was reported that both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum agreed to take immediate measures to address these issues. As a result, President Trump issued a stay for one-month to delay the tariffs in an effort to provide the two other North American countries an opportunity to prove their commitment to these changes. 

 

Major Markets		YTD as of 02/07/2025
	Nasdaq
	Dow Jones Industrial
	S&P 500
	MSCI World
	MSCI EM
	Russell 2000
	Bar US Agg Bnd

S&P Sectors		YTD as of 02/07/2025
	Comm. Services
	Cons. Discretionary
	Cons. Staples
	Energy
	Financials
	Health Care
	Industrials
	Info. Technology
	Materials
	Real Estate
	Utilities
		Agent/Broker Dealer Use Only

Not surprisingly, conversations on Wall Street regarding tariffs have been swirling for months. FactSet reported at the beginning of this week that tariffs have been a predominate theme, at least in part, in the earnings season this quarter. 

Nevertheless, as FactSet further reported last week, 4th quarter earnings has continued to be strong relative to expectations. Last week saw over 700 companies reporting earnings alone. And as of Friday, 62% of the S&P 500 companies have reported, with 77% of those companies beating their Earnings per share estimates . Another 742 companies will report earnings this week. 

Finally, the tariff chatter around the street also impacted the likelihood of future rate cuts to the Fed Funds Rate. The CME Group’s Fed Watch Tool saw the probabilities of interest rates shift enough to see that the greater probability would be of possibly only one interest rate cut midyear, with less likelihood of an additional cut late in the year. 

https://www.nbcnews.com/politics/economics/mexicos-president-says-tariffs-will-delayed-one-month-rcna190433

https://insight.factset.com/highest-number-of-sp-500-companies-citing-tariffs-on-earnings-calls-since-q2-2019

https://insight.factset.com/sp-500-earnings-season-update-february-7-2025

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