MW S&P 500 hit with weekly loss after renewed tariff jitters in U.S. stock market

By Christine Idzelis

'We may be seeing more volatility going into weekends,' warns CIO of Navellier

The U.S. stock market slumped Friday, with the S&P 500 giving up its weekly gain after investors fretted over reciprocal tariffs planned by President Donald Trump.

The S&P 500 SPX closed down 0.9% on Friday, leaving the U.S. large-cap stock index with a loss this week of 0.2%, according to Dow Jones Market Data. The S&P 500 snapped a three-day winning streak and logged back-to-back weekly declines.

Investors braced for trade-war escalation after President Trump indicated Friday that next week he would reveal plans for reciprocal tariffs. Wall Street's so-called fear gauge, the Cboe Volatility Index, also known by its ticker VIX VIX, climbed 6.7% Friday to 16.54 as details of the looming tariffs remained uncertain. That reversed its fall in morning trade.

"It wouldn't be a surprise to see the VIX remain elevated until the tariff situation has played out," said Louis Navellier, the chief investment officer of money-management firm Navellier, in emailed comments Friday. "We may be seeing more volatility going into weekends as the new administration has been showing a tendency to make new announcements over the weekends."

Read: Trump says he'll roll out reciprocal tariffs next week. Here are his possible targets.

The Dow Jones Industrial Average DJIA and technology-heavy Nasdaq Composite COMP both closed sharply lower Friday, also booking weekly losses alongside the S&P 500.

Last Friday saw Wall Street also head into the weekend worried about tariffs, as Trump was set to impose them on Canada, Mexico and China. On Monday, though, the tariffs on Mexico and Canada were paused.

See: The tariff wars aren't over. China hits back over new 10% tariffs.

Whether tariffs end up as "a net benefit to U.S. domestic conditions or a net detriment" may come down to how foreign countries potentially retaliate, according to Bob Elliott, chief executive officer and chief investment officer of Unlimited Funds.

"The big risk for the U.S. economy is really around the retaliation affecting exporters," Elliott said in a phone interview. "If foreigners choose not to buy U.S. goods as a result of the tariffs that are being imposed, that's essentially a direct impact on GDP."

Meanwhile, the U.S. economy has been expanding at "a solid pace," according to a Jan. 29 statement from the Federal Reserve. The Fed announced that day that it was pausing its interest-rate cutting cycle, citing "somewhat elevated" inflation and a "solid" labor market.

During his Jan. 29 press conference about the central bank's decision to keep its benchmark rate at the current level, Fed Chair Jerome Powell also indicated the he was waiting to see how uncertain White House policies on tariffs, immigration, fiscal policy and regulatory policy would play out in the economy.

"Tariffs create the worst possible combination of pressures for the Fed, if they both raise domestic prices and they hurt domestic growth," said Elliott.

The University of Michigan's consumer-sentiment survey on Friday showed a jump in inflation expectations over the next year. Investors also digested on Friday the latest U.S. jobs report, which showed the unemployment rate fell to 4% in January while wage growth picked up.

In the bond market, Treasury yields rose Friday after investors weighed the latest economic data along with tariff worries. The yield on the 10-year Treasury note BX:TMUBMUSD10Y climbed 4.6 basis points Friday to 4.483%, according to Dow Jones Market Data.

"Ultimately, we are comfortable that the S&P 500 can navigate tariff impacts with trade-offs per other broader Trump policy initiatives," said Scott Chronert, an equities analyst at Citigroup, in a research note Friday. "Still, we advise against getting too complacent on tariff implications and remain wary of volatility episodes as the next several months unfold."

-Christine Idzelis

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February 07, 2025 18:39 ET (23:39 GMT)

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