Week in Review: Trade Wars, Earnings, and Labor Data

This week on Wall Street was marked by several key events that influenced market performance:

• U.S. President Donald Trump’s Trade War Escalation: Trump’s tariff moves dominated headlines, impacting trade relations with Canada, Mexico, and China.
• Fourth Quarter Earnings Season: Major companies like Amazon, Walt Disney, Uber, and Qualcomm released their quarterly reports.
• Economic Data on the Labor Market: The January nonfarm payrolls report revealed a moderation in job growth but an unexpected decrease in unemployment.

Trade War Developments

Tariffs on Canada and Mexico

Initially, a 25% tariff on Canada and Mexico went into effect, causing concern among investors. However, due to both North American nations expressing a willingness to negotiate, Trump delayed the implementation of these tariffs. This development provided some relief to the markets, as further trade disruptions were temporarily avoided.

Tariffs on China

Trump also approved a 10% tariff on Chinese goods, leading to a direct response from China. The world’s second-largest economy imposed its own duties on imports of multiple American products, including LNG, coal, and more. This tit-for-tat action heightened trade tensions and increased uncertainty in the market.

“Reciprocal Tariffs” Announcement

Adding to the trade war narrative, Trump announced plans for “reciprocal tariffs,” where the U.S. would respond with the “same exact tariff” if any country imposed tariffs on American goods. This announcement signaled a more aggressive stance on trade and further complicated the outlook for international commerce.

Earnings Season Highlights

The fourth quarter earnings season continued to be a major focus for investors, with several key companies releasing their quarterly reports:

• Amazon (AMZN): Amazon’s shares experienced a significant decline following its recent earnings report.
• Walt Disney (DIS) and Uber (UBER): These companies were also among those releasing their results, contributing to the overall earnings season narrative.
• Qualcomm (QCOM): Despite reporting better-than-anticipated earnings, Qualcomm experienced stock price declines.

The mixed reactions to these earnings reports reflected the complexities of the current economic environment, where strong performance in some areas was offset by challenges in others.

Labor Market Data

Economic data on the labor market was also in the spotlight this week:

• January Nonfarm Payrolls Report: This report showed a moderation in job growth but an unexpected downtick in unemployment.

The mixed signals from the labor market data added to the uncertainty, as investors tried to reconcile the slowing job growth with the improving unemployment rate.

Overall Market Performance

For the week, the major indexes experienced slight declines:

• S&P 500 (SP500): Slipped -0.2%.
• Nasdaq Composite (COMP:IND): Shed -0.5%.
• Dow (DJI): Fell -0.5%.

These declines reflected the overall uncertainty and caution in the market, as investors grappled with the various factors at play, including trade tensions, earnings reports, and economic data.