Highlights
Equities rebounded from early steep losses to end only slightly lower Monday amid chaotic news about US tariffs. The Dow Jones industrial average lost 0.3 percent, the S&P 500 fell 0.8 percent and the Nasdaq slipped 1.2 percent. US bond yields and oil prices rose but the dollar declined.
Equities and US Treasuries sold off at the open in New York as the market reacted badly to weekend news that President Trump had imposed big tariffs on Mexico, Canada and China. The losses were largely reversed later in the morning on news that Trump and his Mexican counterpart had reached a tentative arrangement that would delay the tariffs on Mexico for a month. Mexico promised to send troops to the border to intercept drugs flowing into the US. At the NYSE close, investors were waiting for readout on a call with Trump and Canada's prime minister to see if Canada would be granted a similar reprieve.
The Mexico pact appeared to confirm the widely held view that Trump was using the tariffs as a negotiating tactic and that any imposition of the import duties would be short-lived. That would apply to threatened tariffs on the European Union and others. Investors appear confident Canada will get a similar deal. Assuming it does, attention will turn to the EU, which is expected to be next in line.
In other news Monday, the ISM manufacturing purchasing managers report topped expectations and signaled a return to expansion in the sector with increases in new orders, production, prices and employment. Meanwhile, comments from Federal Reserve officials favored a cautious stance with no rush to alter policy given the array of uncertainties. Tariffs add to the uncertainty and were likely to have an impact on prices, they said.
Equities and US Treasuries sold off at the open in New York as the market reacted badly to weekend news that President Trump had imposed big tariffs on Mexico, Canada and China. The losses were largely reversed later in the morning on news that Trump and his Mexican counterpart had reached a tentative arrangement that would delay the tariffs on Mexico for a month. Mexico promised to send troops to the border to intercept drugs flowing into the US. At the NYSE close, investors were waiting for readout on a call with Trump and Canada's prime minister to see if Canada would be granted a similar reprieve.
The Mexico pact appeared to confirm the widely held view that Trump was using the tariffs as a negotiating tactic and that any imposition of the import duties would be short-lived. That would apply to threatened tariffs on the European Union and others. Investors appear confident Canada will get a similar deal. Assuming it does, attention will turn to the EU, which is expected to be next in line.
In other news Monday, the ISM manufacturing purchasing managers report topped expectations and signaled a return to expansion in the sector with increases in new orders, production, prices and employment. Meanwhile, comments from Federal Reserve officials favored a cautious stance with no rush to alter policy given the array of uncertainties. Tariffs add to the uncertainty and were likely to have an impact on prices, they said.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
