Market Summary – February 3, 2025

Last Week’s Summary

  • S&P 500 Index fell 0.99%
  • International Equities gained 0.55%
  • Emerging Markets rose 0.32%
  • U.S. 10-Year Treasury Yield fell to 4.54%
  • FOMC left rates unchanged at 4.25% – 4.50%
  • Initial Jobless Claims fell to 207k
  • GDP fell to 2.3%
  • Core PCE remained at 2.8%
  • Personal Income stayed at 0.4%
  • Personal Spending rose to 0.7%

What to Watch for This Week

  • M, 2/3/25 S&P Global US Manufacturing, ISM Manufacturing
  • T, 2/4/25 Factory Orders, Durable Goods Orders
  • W, 2/5/25 MBA Mortgage Applications, ADP Employment Change, Trade Balance, ISM Services Index
  • Th, 2/6/25 Initial Jobless Claims
  • F, 2/7/25 Change in Nonfarm Payrolls, Unemployment Rate, U. of Mich. Sentiment

Weekly Market Recap

Markets kicked off the week on shaky ground following reports that China’s DeepSeek is emerging as a formidable competitor to U.S.-based AI companies-delivering similar capabilities at a fraction of the cost borne by domestic firms.

As the week progressed, market sentiment was further rattled by fast-changing developments on tariffs. On Friday, the turbulence intensified after the White House announced that President Donald Trump plans to impose tariffs on China, Mexico, and Canada over the weekend.

The news sent the dollar higher while stocks took a hit, erasing an earlier rally in the S&P 500 that had neared 1%. The greenback closed out its strongest week since November, buoyed by expectations of escalating trade tensions. The White House detailed Trump’s intent to implement 25% tariffs on imports from Mexico and Canada, alongside a 10% levy on Chinese goods.

Speaking Friday, the president signaled an even broader tariff agenda, targeting steel, aluminum, oil and gas, pharmaceuticals, and semiconductors in the months ahead. He also hinted at a “substantial” tariff response aimed at the European Union. Meanwhile, as widely expected, the Federal Reserve held interest rates steady and reiterated its data-dependent approach to future policy moves.

The central bank’s preferred inflation gauge, the PCE index, remained unchanged at 2.8%, indicating that while progress has been made in the fight against inflation, the final push toward the Fed’s 2% target may prove more stubborn than initially anticipated.

60-Second Breakdown:

Redwood Senior Analyst Michael C. Sasaki, CFA® discusses recent market performance and explains this week’s chart.

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Bryan Bourgeois, CEO/Founder of Shorebreak Capital, discusses why 90% of investors fail and how to avoid these common investment mistakes with Conner Small, Partner at Redwood Investment Management, Shorebreak Capital’s dedicated asset manager.

Download Market Snapshot February 3, 2025

Market Summary

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