Stocks fall amid inflation and Trump tariffs

The stock market faced a challenging week as rekindled inflation concerns and tariff threats from President Donald Trump dampened investor sentiment. The Dow and Nasdaq lost just over 0.5%, while the S&P 500 fell almost 0.25%. Initially, investors looked past higher-than-expected wage inflation in the government’s mixed employment report. However, an uptick in retail inflation concerns in the University of Michigan’s consumer sentiment survey sent stocks lower. The market took another hit when Trump announced plans to impose matching levies on trading partners that put tariffs on American imports. This development slammed the door on the possibility of a winning week on Wall Street. Earnings were a big theme last week, as quarterly results and commentary from companies like Alphabet and Amazon confirmed what Meta Platforms and Microsoft revealed: Big Tech still plans to invest heavily in artificial intelligence capabilities. This relieved chipmakers Nvidia and Broadcom, which had faced concerns after Chinese startup DeepSeek unveiled a lower-cost AI model. Positive earnings updates helped Meta achieve an impressive 15-session winning streak. We also received earnings from Disney, Honeywell, Linde, Bristol Myers Squibb, and Eli Lilly. Jim Cramer saw buying opportunities in these companies and suggested holding onto Lilly and Linde.

Stocks react to renewed tariff fears

Additionally, the Club exited Stanley Black & Decker in favor of Home Depot to maintain exposure to the housing recovery with less tariff risk. Texas Roadhouse was added to our portfolio. This week will feature fewer earnings reports but a packed economic calendar with essential data and central bank commentary. Federal Reserve Chairman Jerome Powell will deliver his semiannual economic report to Congress, facing scrutiny from Republican lawmakers. The market anticipates a one-rate cut in 2025, with a second projected cut at about 50-50 odds due to steady but elevated inflation. Key economic data releases include January consumer inflation and wholesale inflation reports. This week, we’re keeping an eye on earnings from DuPont, GE Healthcare, and Palo Alto Networks. DuPont is expected to report a nearly 6% year-over-year increase in fourth-quarter revenue and a 12.6% increase in earnings per share. GE Healthcare is expected to report a 2.5% increase in fourth-quarter revenue and a 6.8% increase in EPS. Palo Alto Networks is anticipated to report an 11% increase in its fiscal second-quarter revenue and a 6.8% increase in EPS. Stay tuned for updates as we navigate these key earnings and economic reports this week.