Market Gets a Heavy Dose of Its Least Favorite Thing. Here's What to Expect.
Trump's threatened tariffs on Canada, Mexico and China are having their expected impact on the indexes as more key earnings, jobs news and data await next week.
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The market was chugging along nicely on Friday until the White House Press Secretary announced President Trump was committed to implementing tariffs on Canada, Mexico, and China. It was straight downhill from there, with all the indexes finishing at the lows of the day.
Breadth went from positive to 2,700-6,900 negative. Small-cap stocks IWM were the big losers, with a loss of 0.9%. Apple AAPL gapped higher at the open following its earnings report and target increases from analysts, but it reversed lower, completely filled the gap, and finished with a decline of 0.8%.
The big problem now is uncertainty. There are negotiations taking place with Canada to deal with the border and fentanyl, but Trump is saying that there is nothing Canada, Mexico, or China can do and that he may raise the tariffs higher. Trump also says that tariffs are coming on oil, metals, and chips and that he is not concerned about the market's reaction.
This is typical of how Trump negotiates but it creates tremendous uncertainty and makes it hard for the market to discount the impact. I suspect some furious negotiations are taking place, and we'll probably have news before the open on Monday.
Next week we have hundreds of earnings reports to consider, the January jobs news, and other economic data.
Trading and stock picking have been working well recently, and this tariff news will create even more volatility and opportunity. I remain optimistic about market conditions, but you must be ready for some big swings on tariff and economic news.
Have a great weekend. I'll see you on Monday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
