Stocks initially sold off, then, as the day wore on and various reporting had Ukraine wanting to complete the mining deal that was scuttled on Friday and Commerce Secretary Howard Lutnick implying that Canada, Mexico, and Trump were willing to compromise on the 25% tariffs and reciprocation. Stocks headed to the upside.
In the final half hour, there was simply too great a supply of sellers. The NASDAQ sold off violently along with the S&P and the Dow. The experience was surreal and third-worldly. Between Trump, news leaks, and the algorithms that make 80-90% of Wall Street's trades, there was little certainty about anything.
The NASDAQ briefly entered correction ground, down more than 10% from highs made in November, 2024. From the lows to the highs, NASDAQ traversed 600 points through the day and, along with the S&P, has finished in the red seven of the last nine sessions, the Dow, five of the last eight.
Gains for the year have vanished, with the Dow holding up the best, down just 0.05%, while the S&P is off 1.76%, and the NASDAQ, 5.31%.
Banks and financials, particularly the largest ones - Bank of America (BAC), JP Morgan (JPM), Goldman Sachs (GS) and Citigroup (C) - were hardest hit, falling between four and six percent by the close. Even credit card issuers Discover (DFS) and Capital One (COF) were down 6.01% and 5.75% respectively, the pair in the midst of a $45 merger that's been approved by shareholders, though approval from the Federal Reserve and the Office of the Comptroller of the Currency have yet to be issued.
The Dow Jones Transportation Average is already in correction, down more than 12% from November highs and is trading below its 200-day moving average. Tariffs, especially those concerning the countries of North America, would likely prove to be damaging to many in the transportation sector.
Tuesday night, President Trump took a victory lap in a nationally-televised address to a joint session of congress where he enumerated his administration's accomplishments, acknowledged the work of his newly-appointed cabinet and singled out select Americans as prime exemplars of his self-defined "Golden Age." Pointing out how the Democrats continue to oppose him and show zero support for the changes he is making was a nice touch. He also made clear that Joe Biden was the worst-ever American President.
Notably, the President did not mention any backing off on the tariffs, but actually pointed out more severe penalties toward other countries would be put into effect on April 2nd. He mentioned a note from Ukraine's President Zelensky indicating that the mining deal may be back on the table, though it was still uncertain and unsigned.
Private employers added 77,000 jobs in February according to ADP's monthly private sector jobs report, released Wednesday morning. According to their survey, hiring slowed to the smallest level of gains since July, 2024, with trade and transportation, health care and education, and information showing job losses. Small business employment also fell.
Since the ADP figures do not include government, with DOGE job eliminations running somewhere in the neighborhood of 70-120,000, not including the 75,000 who accepted buyouts and will be paid through September, Friday's Non-Farm payroll data from the BLS could very easily be a negative number and certainly not the last. That may cast a further pallor over the stock market and have other diverse effects on the economy. It's a wait-and-see scenario now on Wall Street.
Crude oil continued to price lower. WTI crude dropped to $67.81 by the close Tuesday the lowest level since the decline began more than six weeks ago (January 15, $78.71). It's down further Wednesday morning, to around $66.72.
Briefly, Ross Stores (ROST) forecast annual sales and profit below estimates on weaker demand in their fourth quarter release after the close Tuesday. Nordstrom posted better-than-expected earnings ahead of going private. Shares are modestly higher pre-market. Foot Locker (FL) is trading two percent higher after beating on EPS but missing on the revenue side. Abercrombie & Fitch (ANF) is trading 9-10% lower after issuing weak guidance Wednesday morning.
Futures are close to flat-lining a half hour until the open. Gold is holding up at around $2,910 and silver pricing at $32.38 before the bell.
Still a lot of uncertainty to go around and stock markets generally don't like being in the dark.
At the Close, Tuesday, February 4, 2025:
Dow: 42,520.99, -670.25 (-1.55%)
NASDAQ: 18,285.16, -65.03 (-0.35%)
S&P 500: 5,778.15, -71.57 (-1.22%)
NYSE Composite: 19,495.55, -327.93 (-1.65%)
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