A research note from Citigroup indicates that companies in the S&P 500 seem to be more preoccupied with tariff policies under President Donald Trump, a point of possible volatility for the U.S. stock market.
” Among Trump policy discussion points, the ultimate role that tariffs play in the ongoing equity market picture stands out,” noted Citi Research analyst Scott Chronert in a report on U.S. stocks dated Jan. 23. Tracking on a three-month moving average in the chart below, he has observed a recent “surge” in corporations mentioning tariffs in transcripts of their quarterly results calls.
Friday’s closing for U.S. stocks was down; the S&P 500 SPX dropped from its record closing high of 6,118.71 recorded Thursday. Still, as President Trump arrived to the White House on Monday, the S&P 500 reserved back-to–back weekly gains.
“Although President Trump sidestepped concerns of an across-the-bow action on inauguration, we expect the issue to continue to be a source of volatility over the next several months,” said Chronert. Policy timetables for tariffs and possible tax reform seem to have been pushed back for now.
See: The U.S. dollar depreciates as Trump 2.0 starts without any immediate tariffs
Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, in a note Friday wrote, “At the World Economic Forum in Davos on Thursday, U.S. President Donald Trump reiterated his threat to use tariffs to bring manufacturing back to the U.S.'”
“Tariffs are top of mind for many investors since it is the area where the president has most unilateral authority to change the market consensus around continuous growth and receding inflation,” said Marcelli.
Aggressive tariffs have scared investors about possibly generating inflationary pressures and so impairing economic development. Next week the Federal Reserve, which started an interest-rate-cutting cycle in September following a significant drop in U.S. inflation from its 2022 top, will convene a two-day monetary policy meeting.
Friday’s major U.S. stock indexes were lower; the S&P 500 dropped 0.3%, the Dow Jones Industrial Average DJIA dropped 0.3%, and the Nasdaq Composite, which leans heavily toward technology, dropped 0.5%. Recording a back-to–back weekly increase, the S&P 500 rose 1.7% for the week.
