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Breakfast News: Trade War Erupts

Motley Fool
03 Feb

Breakfast News: Trade War Erupts

February 3, 2025

Friday's Markets
S&P 500
6,041 (-0.5%)
Nasdaq
19,627 (-0.28%)
Dow
44,545 (-0.75%)
Bitcoin
$101,629 (-3.38%)

Source: Image created by JesterAI.

1. Markets Slide as Tariffs Imposed

Stock futures dipped sharply this morning, with S&P futures down 1.3% and Nasdaq futures down 1.5%, following President Trump's announcement of 25% import tariffs on goods from Canada and Mexico, with an additional 10% duty on China. European stocks opened lower after yesterday's comments from Trump that he'd "definitely" impose trade tariffs on the EU.

  • The retaliation begins: Canada has replied with a 25% import duty on $107 billion of U.S. goods, while Mexico President Claudia Sheinbaum spoke of "tariff and non-tariff measures" in response. China labeled Trump's tariffs as a violation of World Trade Organization rules and says it will respond.
  • "Largest shock in global trade policy since the collapse of Bretton Woods": Deutsche Bank (DB -1.06%) analysts expect to "see immediate recessionary consequences for some of the economies involved."

2. Bitcoin Joins the Rout

Bitcoin (BTC -2.90%) hit an all-time high above $109,000 in January. But it's fallen nearly 8% to under $95,000 since Saturday, as major cryptocurrencies all tumbled after the President signed his new tariff orders.

  • "A sustained tariff war will be amazing": Jeff Park at Bitwise Asset Management says Bitcoin can benefit in the long run.
  • "Crypto is really the only way to express risk over the weekend": Chris Weston at Pepperstone described crypto as a "risk proxy," as some commentators fear a fall to under $80,000.

3. Key Earnings in the Week Ahead

Tuesday brings Q4 results from Stock Advisor rec Alphabet (GOOG 1.47%), which has beaten the S&P 500 by 788% since that first 2012 recommendation. Signs that AI search features are driving increased traffic and boosting advertising revenue could be key.

  • "A touch high": Wednesday brings a Q4 report from Walt Disney (DIS -0.33%), and Citigroup (C -0.53%) thinks earnings per share expectations might be a bit rich, after the previous four quarters beat forecasts.
  • Reaching record highs: With a couple of Hidden Gems recommendations in the past few years, Amazon (AMZN 1.30%) has climbed 7.4% year to date ahead of Q4 figures due Thursday. Investors will want to see how its Amazon Web Services (AWS) business is doing after Q3 AWS revenue rose 19% year over year to $27.5 billion.

4. What to Watch on Monday

U.S. alcohol companies may be among those hardest hit by tariffs, with 83% of beer imports and nearly half of spirits coming from Mexico in 2024, says Bank of America (BAC -0.90%). Diageo (DEO -1.32%) fell 3.4% pre-market, with Constellation Brands (STZ -1.91%) down close to 6%.

  • "We think the ISM manufacturing index is likely to break above 50": Bank of America sees a bullish outlook for the latest ISM Manufacturing PMI print due today. It could indicate earnings acceleration and could be bullish for stocks.
  • Up 385% in the past 12 months: Palantir (PLTR 1.56%) will post Q4 earnings after the bell. Eyes will be on further customer deals for its Artificial Intelligence Platform (AIP), with possible defense and international wins on the cards.

5. Foolish Fun

Palantir was the S&P 500's top-performing stock in 2024, with an eye-catching 340% gain. Which two stocks do you believe can outperform it over 5 years, and – in particular – why. And just to make it a little harder, you can't pick any company with a market cap over $1 trillion! Debate with friends and family, or become a member to hear what your fellow Fools are saying.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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