On February 3rd, 2025, the New York Stock Exchange (NYSE) provided its daily pre-market update, underscoring significant changes and challenges facing traders. The update, delivered by Kristen Scholer from the NYSE Trading Floor, highlighted increasing volatility as market participants digested new tariffs imposed by the U.S. government.
Traders are bracing for the impact of President Trump's tariffs, which have been set at 25% on goods imported from Mexico and Canada and 10% on imports from China. According to reports, these measures were enacted through the International Emergency Economic Powers Act, with Trump asserting the decision was necessary to combat threats, including illegal immigration and drug trafficking. "This was done through the International Emergency Economic Powers Act (IEEPA) because of the major threat of illegal aliens and deadly drugs killing our Citizens," Trump stated on social media platform X.
The imposition of tariffs is causing widespread apprehension among investors, particularly as the manufacturing sector had only just begun to show signs of recovery. The Institute for Supply Management’s Purchasing Managers Index (PMI) moved to 50.9 for January from December’s 49.2, signaling expansion after nine months of contraction. While the uptick in manufacturing sentiment indicates some positive momentum, analysts warn the new tariffs could undermine this progress. Timothy Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee, voiced his concerns, saying, "Free trade is best for business," and expressed hope for swift resolution to the tariff disputes.
Despite the positive manufacturing data, stock indices are reacting negatively to the tariff news. Early trading on February 3rd showed the Industrial Select Sector SPDR ETF down nearly 2%. The pessimism surrounding tariffs and potential retaliatory measures is palpable. Canada has already announced intentions to impose 25% tariffs on approximately $155 billion Canadian dollars (around $106 billion U.S. dollars) worth of U.S. imports.
Beyond tariffs, the NYSE update also alluded to upcoming earnings reports from major technology firms Amazon and Alphabet slated for the week. These financial disclosures are closely watched by analysts and investors, who are eager to gauge how broader economic conditions, including the tariffs, may influence these corporate giants. The market's heightened volatility is expected as traders adjust their strategies according to these reports.
Both Amazon and Alphabet have significant market presence and have previously navigated economic fluctuations successfully. Their earnings reports will serve as indicators not only for their individual performance but for the overall market’s health amid rising uncertainties. "Amazon & Alphabet scheduled to report earnings this week," Scholer announced during the update.
With the backdrop of tariffs weighing heavily on investor sentiment, all eyes will be on how these companies report their earnings and what guidance they will provide for the future. The stakes are particularly high, as positive results could help bolster the market's outlook, even as uncertainties linger.
Overall, the pre-market conditions on February 3rd paint a picture of cautious trading as market participants digest the potential ramifications of new tariffs and await key earnings reports from prominent companies. With the persistent issues of international trade tensions combined with the relatively newfound optimism from the manufacturing sector, the market is at a crossroads, offering little clarity on the path forward.
Investors are left wrestling with conflicting information: the good news of manufacturing growth juxtaposed against the looming threats posed by tariffs. It is clear the financial markets will need to navigate through this tumultuous period with agility as new developments arise. The NYSE will continue to monitor these dynamics and provide insights through its daily broadcasts to keep traders informed.