U.S. stocks closed the first week of February with little change, as investors processed Big Tech earnings, a hotter-than-expected jobs report, and ongoing uncertainty surrounding President Donald Trump’s tariffs.
The S&P 500 remained flat, while the Nasdaq and Dow Jones both dipped about 0.4%. Looking ahead, inflation will take center stage, with key reports including the Consumer Price Index (CPI) on Wednesday, wholesale inflation and jobless claims on Thursday, and retail sales data on Friday.
Market Focus: Inflation and Interest Rates
The January jobs report showed unexpected labor market strength, leading analysts to predict that the Federal Reserve will not cut interest rates soon. This puts extra emphasis on upcoming inflation data to determine whether borrowing costs may come down later this year.
“The labor market has regained its footing, which reduces the risk of a sharp downturn,” said Sarah House, senior economist at Wells Fargo.
Trump’s Tariffs Keep Markets on Edge
Investors continue to monitor Trump’s proposed tariffs, which include:
- 25% tariffs on steel and aluminum (announcement expected Monday).
- Reciprocal tariffs on American imports from other nations.
- Potential new tariffs on Japan, following Trump’s meeting with Prime Minister Shigeru Ishiba.
After the initial sell-off on Monday, markets rebounded when Trump delayed tariffs on Mexico and Canada for a month.
Upcoming Economic Reports
- Wednesday: CPI inflation data (+2.9% expected).
- Thursday: Producer Price Index (PPI) and jobless claims.
- Friday: Retail sales report.
Corporate Earnings in Focus
This week, 78 S&P 500 companies will report earnings, including:
- McDonald’s (MCD) and Coca-Cola (KO) on Tuesday.
- CVS Health (CVS) and Cisco (CSCO) on Wednesday.
- Airbnb (ABNB) and Coinbase (COIN) on Thursday.
- Moderna (MRNA) on Friday.
With the Federal Reserve watching inflation closely and markets adjusting to Trump’s shifting trade policies, investors are bracing for a volatile week ahead.
