Stocks ended lower Monday, but the Dow Jones Industrial Average pulled off a major rebound after President Donald Trump said tariffs against Mexico would be paused for one month.
The Dow finished the session down 122.75 points, or 0.28%, to close at 44,421.91, after tumbling 665.6 points, or 1.5%.
The S&P 500 gave up 0.76% to close 5,994.57, while the tech-heavy Nasdaq lost 1.2% to finish the session at 19,391.96.
Meanwhile, Palantir shares were surging nearly 19% after the data analytics company beat Wall Street's fourth-quarter earnings and revenue estimates and offered better-than-expected guidance.
The company earned 14 cents per share on $828 million in revenue, compared with analysts’ forecasts of 11 cents per share in earnings on $776 million in sales.
The company earned 14 cents per share on $828 million in revenue, compared with analysts’ forecasts of 11 cents per share in earnings on $776 million in sales.
Palantir said it expects revenue of between $858 million and $862 million for the current quarter, topping Wall Street’s call for $799 million.
For the full year, the company forecast sales of $3.74 billion to $3.76 billion, topping the $3.52 billion average estimate.
“Our business results continue to astound, demonstrating our deepening position at the center of the AI revolution,” Alex Karp, co-founder and CEO said in a statement.
“Our early insights surrounding the commoditization of large language models have evolved from theory to fact," he added.
Updated at 1:25 PM EST
Palantir on deck
Palantir (PLTR) , one of the top-performing stocks of last year, moved into positive territory in early afternoon trading ahead of the data analytics group's fourth quarter earnings after the close of trading
"We believe Palantir has a path to become the next Oracle or Salesforce over the coming years and while the valuation is expensive today we see the Messi of AI as a core winner in the trillions of AI spend over the next few years," said Wedbush analyst and longtime Palantir bull Dan Ives.
Palantir shares were last marked 0.55% higher at $82.94 each, extending their six-month gain to around 244%.
Related: Top analyst reworks Palantir stock price target ahead of Q4 earnings
Updated at 11:57 AM EST
Manufacturing boost ... maybe
U.S. manufacturing activity rose to the highest levels in more than two years last month, based on data from ISM's benchmark index, just as the sector is asked to grapple with the uncertainty tied to Trump tariffs and the potential for a broader trade war.
ISM's January index rose by more than a point, to 50.9, the highest since September of 2022 and just past the 50-point threshold that generally separates growth from contraction for the first time in 26 months.
New orders were pegged at the highest in nearly three years, perhaps reflecting a pick-up in activity ahead of the proposed tariff threats.
"A wave of pre-emptive purchases is, by definition, temporary," said Oliver Allen senior U.S. economist at Pantheon Macroeconomics. "Purchases from other trade partners who appear next in the firing line might step up in the near term."
"But pre-emptive purchases driven by worries about tariffs on imported goods from Canada, China, and Mexico surely will unwind sharply if extensive new tariffs are applied to those countries tomorrow," he added. "It seems more likely that disruption to supply chains and a hit to demand from higher prices start to weigh heavily on US manufacturing soon."
January ISM Manufacturing up to 50.9 vs. 50 est. & 49.2 prior (rev down from 49.3); new orders up to 55.1 vs. 52.1 prior; prices paid up to 54.9 vs. 52.5 prior … employment up to 50.3 vs. 45.4 prior pic.twitter.com/KaSZ4DZgTH
— Liz Ann Sonders (@LizAnnSonders) February 3, 2025
Updated at 10:41 AM EST
Border deal
Stocks are paring some of their earlier declines following news that Mexico President Claudia Sheinbaum has agreed to deploy 10,000 troops to the U.S border and, in return, has won a one-month reprieve on tariffs put in place over the weekend by President Donald Trump.
The S&P 500 was last marked 55 points lower, or 0.91%, following Sheinbaum's statement, with the Dow marked 190 points lower. The Nasdaq was last seen down 250 points or 1.30%
MEXICO'S PRESIDENT SHEINBAUM: I THINK IT WAS A GOOD AGREEMENT; THE DEAL WILL ALSO HELP MEXICO BOOST BORDER SECURITY.
— FinancialJuice (@financialjuice) February 3, 2025
Updated at 9:38 AM EST
Big slide
The S&P 500 was marked 91 points, or 1.5% lower in the opening minutes of trading, with the Nasdaq falling 351 points, or 1.79%.
The Dow slumped 484 points and the mid-cap Russell 2000 fell 52 points, or 2.28%.
"The uncertainty at this stage is tremendous - not only of how these eventual negotiations will play out, but worries about how this is only the tip of the iceberg and more tariffs are on the horizon," said Yung-Yu Ma, chief investment officer at BMO Wealth Management.
"While we believe that tariffs are primarily a negotiating tool for President Trump, it's very difficult to say whether these tariffs will be short-lived or if there is a scenario where a deal is struck that reduces the tariffs,' Ma added. "The markets may need to figure out a way to come to terms with a new tariff regime."
S&P 500 Opening Bell Heatmap (Feb. 03, 2025)$SPY -1.50% 🟥$QQQ -1.72% 🟥$DJI -1.06% 🟥$IWM -2.41% 🟥 pic.twitter.com/VJUAqHZPaP
— Wall St Engine (@wallstengine) February 3, 2025
Updated at 8:38 AM EST
Goldman warning
Goldman Sachs analyst David Kostin has outlined the potential impact for U.S stocks on Trump's proposed tariffs, suggesting the potential for a 5% pullback for the S&P 500 from current levels.
"If company managements decide to absorb the higher input costs, then profit margins would be squeezed," Kostin and his team said. "If companies pass along the higher costs to its end customers, then sales volumes may suffer."
Related: Goldman Sachs analysts warn on Trump tariff impact for stocks
Stock Market Today
Trump, as promised, unveiled plans to impose a 25% levy on goods imported from Canada and Mexico, which operate within a trade agreement he renegotiated in 2019. The tariffs are slated to start on Feb. 4, with the duty placed on crude and energy products from north of the border set at 10%.
A similar 10% levy is set for goods from China, with the EU "definitely" facing tariffs over the coming weeks as part of his powers under the International Emergency Economic Powers Act that, collectively, would cover around half of all U.S. imports.
"We may have short term some little pain, and people understand that. But long term, the United States has been ripped off by virtually every country in the wo AM Erld," Trump told reporters in Washington.
The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, surged to a two-year high in overnight trading and was last marked 1.05% higher at 109.506 as investors snapped-up defensive assets amid worries over a global trade war.
China has said it will take "appropriate measures" on U.S. goods in retaliation, and planned a legal challenge through the World Trade Organization, while Canada has outlined its tariff response and Mexico is preparing to do the same.
"If Mexico, Canada and China push through with the announced retaliation, the global economy would see an unprecedented escalation of trade tensions," said ING's senior economist for global trade, Inga Fechner. "Over the longer run, economically speaking, escalating trade tensions are a lose-lose situation for all countries involved."
Related: Inflation report upends Fed interest rate cut bets in 2025
Oil prices were also on the move, with WTI crude future rising by $1.86 to $74.40 per barrel amid the disruption linked to North America's closely integrated energy markets.
On Wall Street, stocks are braced for heavy opening-bell declines, with the S&P 500 called 85 points lower and the Dow Jones Industrial Average looking at a 550 point pullback from Friday's close.
The tech-focused Nasdaq, meanwhile, is called 344 points lower with declines across the board including Nvidia (NVDA) , Tesla (TSLA) , Apple (AAPL) and Alphabet (GOOGL) .
The market's benchmark volatility gauge, the CBOE Group's VIX index, surged to the highest level in more than six weeks and was last marked 25.4% higher at $19.87.
The suggests traders are expecting daily swings of 1.24%, or 75 points, for the S&P 500 over the next month.
More Economic Analysis:
- Major fund manager reveals stock market forecast for 2025
- Surprising December retail sales report upends inflation bets
- Jobs report has big implications for Fed rate bets, Treasury yields
Markets saw similar reactions overseas, with Europe's Stoxx 600 falling 1.43% in Frankfurt and Britain's FTSE 100 down 1.25% in London amid the uncertainty tied to Trump's next tariff target.
Overnight in Asia, Japan's Nikkei 225 fell 2.66% in Tokyo, while the regional MSCI ex-Japan benchmark was marked 2.16% lower heading into the final hours of trading.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
