Tariffs and Tumbles | Week #07 | Feb 10, 2025

Tariff tensions and mixed economic data lead to volatility, as investors brace for key inflation reports and major earnings next week

Last week, the stock market experienced volatility amid tariff concerns, ultimately closing mostly lower. As of midday February 7, 2025, the S&P 500 Index dipped 0.1%, the Nasdaq declined by 0.4%, and the Dow was on track to fall by 0.2%. The Dow closed at 44,303, down 0.5% for the week, and up 4.1% YTD.

Tariff uncertainty significantly impacted market psychology. A mixed January jobs report also played a crucial role, revealing slower job growth, a lower unemployment rate, and higher wage growth. The report showed nonfarm payrolls added 143,000 jobs, below expectations, but there were upward revisions to the prior two months. Average hourly earnings rose by 0.5%, above expectations, bringing the year-over-year increase to 4.1%.

Additionally, conflicting labor market data and declining consumer sentiment contributed to market dynamics. The ISM manufacturing PMI moved into expansion, while the services PMI declined but remained expansionary. The fourth-quarter earnings season was also underway.

Outlook for the Week Ahead:

Next week's market outlook hinges on several key factors, including inflation data, retail sales figures, and Federal Reserve Chair Powell's testimony. The S&P 500, NASDAQ, and Dow Jones Industrial Average will likely react to these catalysts.

Inflation data is a critical influence. Investors will be closely watching the January Consumer Price Index (CPI) and Producer Price Index (PPI) releases, which include annual revisions.

Major earnings reports to watch include McDonald's MCD 0.00%↑, Vertex Pharmaceuticals VRTX 0.00%↑, Coca-Cola Co. KO 0.00%↑, Shopify Inc. SHOP 0.00%↑, CVS Health Corp. CVS 0.00%↑, Cisco Systems CSCO 0.00%↑, Deere & Co. DE 0.00%↑, Airbnb Inc. ABNB 0.00%↑, and Moderna Inc. MRNA 0.00%↑.

Overall, the market's direction will depend on how these factors align with or defy current expectations, potentially leading to either gains or continued volatility.

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Major Earnings to Watch Next Week

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