Stocks regained some footing Monday, but ultimately fell lower, after the United States and Mexico said tariffs against the southern trading partner would be paused for one month. The Dow Jones Industrial Average dropped over 100 points, after falling as much as 665 points earlier in the session, while the S&P 500 Index and Nasdaq Composite lost 0.8% and 1.2%, respectively.
Here's how the market settled on Monday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
The broader market initially plunged earlier in the trading session after President Donald Trump announced tariffs on Canada, Mexico and China, sparking fears over possible global supply chain disruptions, increased inflation and slowed U.S. economic growth.
In a post Monday, Mexico President Claudia Sheinbaum said the nation's leaders met with Trump and "reached a series of agreements," according to a translation from Spanish, boosting some investor confidence that the tariffs may be more of a negotiating tool for the Trump administration.
Over the weekend, the Trump administration issued a 25% tariffs on imported goods from Canada and Mexico -- with energy imports from Canada having a special 10% tariffs. Trump also placed a 10% tariffs on all goods from China and signaled that similar tariffs could be imposed on the European Union.
Canadian Prime Minister Justin Trudeau issued 25% retaliatory traffic on $155 billion worth of U.S. goods, stating: "Like the American tariffs, our response will also be far-reaching and include everyday items such as American beer, wine and bourbon, fruits and fruit juices, including orange juice, along with vegetables, perfume, clothing and shoes."
U.S. automakers General Motors
Shares of Tesla
"The fear for markets is that the duration of this trade war could drag on and that escalation not only with Canada, Mexico, and China is possible, but that new fronts could emerge, such as tariffs on the European Union in areas such as pharmaceuticals, semiconductors and steel, are likely to be opened while the existing ones are raging. To call this a daring strategy is a tremendous understatement," said Yung-Yu Ma, chief investment officer at BMO Wealth Management, in a Monday note.
Trump Executive Order:
On Monday, Trump signed an executive order outlining plans to established a government-run sovereign wealth fund to operate as an economic development vehicle, and potentially purchase ByteDance's TikTok. The fund's primary aims are to develop infrastructure and extend U.S. influence in nations such as Panama and Greenland.
"We're going to stand this thing up within the next 12 months. We're going to monetize the asset side of the U.S. balance sheet for the American people," U.S. Treasury Secretary Scott Bessent told reporters on Monday. "There'll be a combination of liquid assets, assets that we have in this country as we work to bring them out for the American people."
On the Economic Front:
U.S. Manufacturing Activity expanded in January for the first time in over two years, the Institute for Supply Manufacturing reported Monday, as production increased to meet demand. The ISM manufacturing index posted a reading of 50.9%, representing the share of companies reporting growth throughout the month, coming in 1.7 percentage points above December's print and reversing the 26-month construction trend.
"Demand improvement includes: the (1) New Orders Index moving further into expansion territory, (2) New Export Orders Index moving back into expansion, (3) Backlog of Orders Index dropping slightly and continuing in contraction, and (4) Customers' Inventories Index remaining in 'too low' territory," said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee, in a statement.
"Output (measured by the Production and Employment indexes) was positive, as factory output improved compared to December, indicating that panelists' companies are proceeding with growth plans," Fiore added. "Employment was stable as final head-count adjustments were made, in many cases among the white-collar workforces."
For Tuesday:
Market participants will continue to monitor the ongoing effects of the Trump administration's tariffs on Tuesday, which are set to go into effect Monday at midnight. Top earnings reports for Tuesday include Palantir Technologies