Tariff Talk, Inflation, and Market Volatility:
Stocks were mixed last week as investor concerns over inflation and trade policy combined to produce another volatile trading week.
The Dow Jones Industrial Average rose 0.95%, while the S&P 500 Index lost 0.98%. Meanwhile, the tech-heavy Nasdaq Composite Index dropped an eye-catching 3.47%. The MSCI EAFE Index, which tracks developed overseas stock markets, lost 1.03%.1,2
Source: Bloomberg Finance, L.P. (Performance data normalized 1/16/25 = 0)
Trade Talk
The week began under pressure after the White House said 25% tariffs on Mexico and Canada would begin after the 30-day pause ends in early March.
On Tuesday, S&P and Nasdaq stocks continued their slide on news that consumer confidence weakened more than expected. Concerns about inflation and tariffs merged with investors fretting over economic growth and global trade. It was the fourth straight day of declines for the S&P 500 and Nasdaq. The Dow, however, advanced for its third consecutive session.3,4
After a quiet Wednesday, stocks fell broadly on Thursday after the White House announced additional tariffs on goods from China and Europe. A large chipmaker prominent in artificial intelligence (AI) matters produced a mixed corporate report for Q4, which put some pressure on the broader market.5,6
Friday’s news that inflation moderated boosted stocks, with prices accelerating higher into the close of trading. The Fed’s favorite core inflation measure hit 2.6 percent in January, which aligns with forecasts.7
Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab
Getting a Read on Tariffs
Markets dislike uncertainty, so steady trade talk produces volatile intra-week trading. Investors don’t know what tariffs will be enforced versus which ones are part of an ongoing negotiation, which can produce unsettling price swings.
S&P 500 companies echo some of that uncertainty. At last check, 146 have mentioned the term “tariff” or “tariffs” on Q4 conference calls with shareholders–the highest level since Q2 2019.8
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1The Wall Street Journal, February 28, 2025
2Investing.com, February 28, 2025
3CNBC.com, February 25, 2025
4MarketWatch.com, February 25, 2025
5CNBC.com, February 26, 2025
6CNBC.com, February 27, 2025
7The Wall Street Journal, February 28, 2025
8Insight.FactSet.com, February 10, 2025
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