There is a lot of volatility coming from Washington DC the last week when concerning that of tariffs. Over the weekend President Trump, stated that tariffs in both Canada and Mexico would be 25% and China would be 10%. Yet by late Monday morning, Mexico agreed to send 10,000 troops to the border and other concessions. After the close on Monday, Canada reached a deal to defer tariffs for at least a month.
What remains now is China can be very ‘tricky’ , in retaliation they will increase tariffs by 15% if a deal is not put together. Stocks were mixed last week as investors parsed market-moving news nearly every trading day—from an unsettling AI update to White House news to Q4 corporate reports.
Markets
The Standard & Poor’s 500 Index fell 1.00 percent while the Nasdaq Composite Index slid 1.64 percent. Meanwhile, the Dow Jones Industrial Average rose, picking up 0.27 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, added 0.75 percent.1,2
A Choppy End to January
The week started on a down note with news that a Chinese artificial intelligence (AI) startup had made a breakthrough, which put pressure on a wide range of tech stocks. The tech-heavy Nasdaq fell 3 percent for the day, but the Dow Industrials ended the trading session slightly higher.3
Stocks were under pressure again mid-week as investors waited on news from the Federal Reserve. The Fed voted to hold firm on short-term interest rates. Even though the decision was widely expected, markets were under pressure again after the Wednesday afternoon announcement.4
Stocks rallied Thursday but reversed course Friday afternoon as traders adopted a more “risk-averse” position going into the weekend. There was a bit of anxiety knowing that the new administration’s tariffs on Mexico and Canada were scheduled to take effect on Saturday. Interestingly, it was the Dow Industrial’s fourth-straight week outperforming both the S&P and the Nasdaq.5
Black Swan Event
It’s hard to overstate how much the markets were caught off guard by Monday’s news related to the success of a new AI startup based in China.6
What unsettled investors was the company’s claim that it developed a competitive AI model that performs as well as its Western counterparts at a fraction of the cost. As the week progressed, markets started to process the news and began to evaluate whether it was truly a “black swan” event or just another development in the fast-moving world of AI.7
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