Stock Market Update

[BRIEFING.COM] Today's trade has been volatile so far as market participants react to incoming headlines.

Initially, the S&P 500 and Nasdaq Composite traded down as much as 1.9% and 2.5%, respectively, 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. The Dow Jones Industrial Average was more than 650 points lower. 

Now, the Dow Jones Industrial Average is about 150 points lower, the S&P 500 sports a 0.9% decline, and the Nasdaq Composite trades 1.3% lower. The improvement coincided with Mexico's President Claudia Sheinbaum saying she had a "good call" with President Trump and he agreed to "pause tariffs for one month."

Investors also received the better-than-expected January ISM Manufacturing PMI, which returned to expansion territory for the first time in 27 months, but didn't react much to the development. 

The Treasury market also had a muted response. The 10-yr yield is at 4.53% and the 2-yr yield is at 4.25%. 

Early declines had many stocks trading lower, but there are pockets of buying interest now. The S&P 500 consumer staples (+0.6%), health care (+0.5%), communication services (+0.2%), and energy (+0.1%) sectors trade higher at this point.

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.