Stock Market Update

[BRIEFING.COM] The week started with some turbulence in the stock market. The S&P 500 and Nasdaq Composite traded down as much as 1.9% and 2.5%, respectively, and the Dow Jones Industrial Average was more than 650 points lower at its worst level.  

This price action was in response to the weekend news that the US imposed a 25% tariff on imported goods from Canada and Mexico (only 10% for Canadian energy) and a 10% tariff on imported goods from China beginning at midnight.

Subsequents news emerged that Mexico's President Claudia Sheinbaum said she had a "good call" with President Trump and he agreed to "pause tariffs for one month." President Trump confirmed the update. 

Stocks moved off their lows in response, but never fully recovered due to ongoing fears about tariffs impacting growth and pressuring inflation higher. The lower finish was also influenced by increased selling in heavily-weighted sectors like information technology (-1.8%), consumer discretionary (-1.4%), and financials (-0.4%). 

There were some pockets of buying interest, though, leading the consumer staples (+0.7%), utilities (+0.5%), and energy (+0.4%) sectors to close higher.

Treasuries settled mixed in response. The 10-yr yield settled three basis points lower at 4.54% and the 2-yr yield settled three basis points higher at 4.27%.

• Dow Jones Industrial Average: +4.4% YTD
• S&P Midcap 400: +2.5% YTD
• Russell 2000: +1.3% YTD
• S&P 500: +1.9% YTD
• Nasdaq Composite: +0.4% YTD

Reviewing today's economic data:

• January S&P Global US Manufacturing PMI - Final 51.2; Prior 50.1
• January ISM Manufacturing Index 50.9% (Briefing.com consensus 49.1%); Prior was revised to 49.2% from 49.3%
  • The key takeaway from the report is that manufacturing sector activity overall moved into expansion territory for the first time after 26 straight months of contraction, underscoring an improved demand backdrop seen in the pickup in the new orders and employment indexes.
• December Construction Spending 0.5% (Briefing.com consensus 0.2%); Prior was revised to 0.2% from 0.0%
  • The key takeaway from the report is that new single-family construction activity picked up despite rising interest rates.

Looking ahead to Tuesday, market participants receive the following economic data:

• 10:00 ET: December job openings (prior 8.098 mln) and December Factory Orders (Briefing.com consensus -0.3%; prior -0.4%)