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Market Update: Tariff Talks and Technology Stocks
In a volatile market session on Monday, the S&P 500 experienced an initial decline following President Donald Trump’s announcement of tariffs on imports from Canada, Mexico, and China over the weekend. Nonetheless, a swift rebound occurred as investors reacted positively to the potential for tariff delays. Trump’s commitment to postpone tariffs on Mexico for one month, in light of a pledge from Mexican President Claudia Sheinbaum to deploy 10,000 soldiers to the border, played a significant role in this recovery.
This situation underscores Trump’s historical pattern of using tariffs as a bargaining chip during negotiations. The pressing question now is how Canada and China will respond, especially as the deadline for the planned tariffs looms on Tuesday. Canada has adopted a more cautious negotiating stance, and Trump has threatened that “tariffs will be substantial” if a deal with China cannot be reached.
Sector Impacts: Technology Stocks Under Pressure
While trade war developments dominate headlines, the market remains vigilant about the implications of DeepSeek’s cost-effective AI model. Tech stocks, particularly those involved in AI infrastructure, faced continued pressure. Notable companies like Nvidia, Dell, Eaton, and GE Vernova experienced declines, reflecting deeper concerns about the potential impacts of a U.S.-China trade showdown.
Though AMD has been removed from the portfolio, its upcoming earnings report on Tuesday night is still anticipated, particularly regarding CEO Lisa Su’s insights on DeepSeek and its influence on the spending habits of major hyperscalers, including Amazon, Alphabet, and Microsoft. Amid ongoing volatility, Nvidia’s position remains a topic of discussion, with plans to reduce holdings while still retaining some exposure, although trading restrictions are currently in place.
Looking Ahead: Earnings and Economic Data
Investors are preparing for a busy week of earnings reports, starting after the market closes on Monday, with key companies such as Palantir, Kyndryl, Clorox, and NXP Semiconductors reporting results. Noteworthy earnings scheduled for release before Tuesday’s market opens include PayPal, Spotify, Pfizer, Merck, PepsiCo, Estée Lauder, Cummins, Regeneron, and Marathon Petroleum.
From an economic perspective, Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) will mark the beginning of a series of labor market updates, culminating in the anticipated non-farm payrolls report set for Friday.
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