Stock Market Update Friday January 31, 2025 Equities traded higher for most of the session, with bullish momentum driving solid intraday gains. However, sentiment shifted abruptly following an announcement from the White House press secretary detailing new tariffs—25% on imports from Mexico and Canada, and 10% on Chinese goods. Full details, expected to be released tomorrow. The S&P 500 (SPX) slipped 0.5%, paring its weekly gain to 1.2%, while the Nasdaq 100 (NDX) edged lower by 0.2%. Rate-sensitive small-cap stocks underperformed, with the Russell 2000 declining 0.8% as investors weighed the potential impact of trade tensions on economic growth.
With key tariff specifics still unknown, traders face heightened uncertainty heading into the weekend. The market’s reaction on Monday will likely hinge on the scope and implementation of these policies, setting the stage for potential volatility in early trading.
Away From Stocks: Treasury yields climbed as bond markets faced renewed selling pressure, with the 2-year yield rising 4 basis points to 4.22% and the 30-year yield advancing 7 basis points to 4.83%, reflecting shifting rate expectations and investor repositioning.
In commodities, WTI crude rebounded from early losses, settling at $73.50 per barrel, while gold surged past $2,800 per ounce for the first time, signaling strong demand for safe-haven assets. Bitcoin retreated below $102,000, extending its recent pullback, while the VIX settled at 16.5, after briefly dipping to 15 intraday, suggesting a modest uptick in implied volatility as markets digested macroeconomic developments.
This morning's inflation report was mostly in line with expectations, which left the bond market stable. The Core Personal Consumption Expenditures (PCE) index increased by 2.8%, while the overall headline figure rose by 2.6%. Both figures are still above the Federal Reserve's target. However, the Employment Cost Index matched forecasts, and yesterday's spending data suggested a positive outlook for consumers.