Rising investor angst about economy to be tested by US jobs data

The stakes are high for the monthly US jobs report in the coming week, as investors gauge whether a string of worrisome data is signaling significant concern about the economy.

The benchmark S&P 500 stock index has pulled back 4% from its all-time high reached earlier this month, while falling Treasury yields and a slide in bitcoin are also indicating increasing investor wariness.

A number of recent economic releases have disappointed or weakened, including consumer confidence, business activity, and retail sales. The Trump administration’s dramatic moves on trade and other policies have injected uncertainty for consumers and businesses.

The monthly employment release is seen as among the most crucial data points assessing the economy’s health and investors will be looking for the jobs data for February, due on March 7, to either bring relief or drive further worry.

“The market is on edge because of fears regarding a US economic growth scare,” Michael Arone, chief investment strategist for the US SPDR Business at State Street Global Advisors. “If the unemployment figure shows signs of weakness, it further fuels the flames for that growth scare.”

Employment in February is estimated to have increased by 133,000 jobs, according to a Reuters poll, compared to 143,000 in added jobs in January. The unemployment rate is expected to be 4.0%.

“The jobs market is the most important pillar of the US economy,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management. “Whether the consumer is in too much debt or whether they’re going to spend is really going to come down to whether or not they have a job and they feel comfortable in their job.”

Despite concerns about economic weakening, investors remain on guard about inflation, with the annual pace of inflation still running above the Federal Reserve’s 2% target, so an overly strong jobs report also could spark market concerns.

“The street is hoping for a number that’s not going to be too cool, too negative relative to expectations, or too hot, meaning that … inflation might take longer than expected to normalize,” said Angelo Kourkafas, senior investment strategist at Edward Jones.

In a possible silver lining for stocks, investors expect more monetary policy easing than they did earlier this month following the recent disappointing economic reports. Fed funds data indicate at least two more interest rate cuts expected by December, according to LSEG.

The jobs data comes as Trump takes dramatic action to shrink the federal workforce, with the administration on Wednesday ordering agencies to undertake more large-scale layoffs. Tens of thousands of US government workers have been fired in recent weeks, according to a Reuters tally of announcements tracking Trump’s plans.

With federal employees and contractors worrying about their jobs, “the risks are rising that households may begin to hold back purchases,” said Torsten Slok, chief economist at Apollo Global Management.

“We remain bullish on the economic outlook, but we are very carefully watching the incoming data for signs if this is an inflection point for the business cycle,” Slok said in a note on Thursday.

Data on manufacturing and the services sector are due in the coming week, when several Fed officials are set to speak and give their views on the economy.

Investors remain mindful of market volatility stemming from further announcements from Trump on tariffs and other policies. The president on Wednesday raised hopes for another pause on steep tariffs on imports from Mexico and Canada, while floating a tariff on European cars and other goods.

“Yesterday was another example of how the words from the White House or the President can shake things up on any given day,” Matthew Maley, chief market strategist at Miller Tabak, said in a note on Thursday.

(Reporting by Lewis Krauskopf; Editing by Nick Zieminski)

Nvidia’s optimistic forecast fails to convince Wall Street

Wall Street took a dim view of Nvidia’s quarterly forecast on Thursday with investors pushing the stock down more than 8%, piling pressure on the “Magnificent Seven” stocks that have garnered market skepticism in the last three months.

The stock closed lower at USD 120.15, while other members of the group such as Microsoft and Amazon also ended the session weaker, after Nvidia’s earnings failed to inspire the kind of gains that became a hallmark of the AI rally through 2023 and 2024.

To be sure, Nvidia’s first-quarter revenue forecast was better than market estimates, with CEO Jensen Huang also noting the company was seeing “amazing” demand for its new Blackwell chips.

But growth is slowing. Nvidia’s projected revenue increase of about 65% is far from the triple-digit growth that investors have been accustomed to in the past year, while the company also expects gross margin to dip to 71%, the lowest level in at least a year.

Nvidia is viewed as a barometer of the health of AI spending and the two-year boom propelled its valuation to more than USD 3 trillion. Investors were hoping its results would restart a rally that has sputtered following the “Magnificent Seven” stocks’ peaks in late 2024.

In recent weeks, Chinese startup DeepSeek’s low-cost AI model had fanned investor skepticism over the billions of dollars earmarked by Big Tech for AI infrastructure, with many of the stocks still struggling to recoup the losses.

Fears of a pullback in spending on Nvidia’s priciest AI chips vaporized more than half a trillion dollars of its stock-market value in a single day last month, a record on Wall Street.

And more recently, an analyst report that Microsoft had cut back on data-center leases reignited concerns over tech companies’ spending.

Nvidia’s report was eyed as a bellwether for chip spending on generative AI – and while it indicated demand remains strong, it did not quell concerns among investors who were hoping for more.

“(The) results and guidance were relatively in line with market expectations − not bullish enough to see another beat and raise,” said HSBC Global Research analyst Frank Lee.

Nvidia expects total revenue of USD 43 billion, plus or minus 2% for the first quarter, compared with analysts’ average estimate of USD 41.78 billion, according to LSEG.

The massive revenue surges and beats that had become synonymous with Nvidia, however, are becoming a thing of the past.

The company’s January-quarter revenue of USD 39.33 billion beat estimates by a margin of 3.4%, compared with a beat of more than 7% in the year-ago period.

Nvidia’s Huang on Wednesday said the company had already pulled in around $11 billion in revenue related to its Blackwell processor in the fourth quarter.

The world’s second-most valuable company has been the top beneficiary of an AI-driven spending spree over the past two years, with its shares gaining more than 400% in that period.

Of the 63 analysts covering the stock, 33 have a “strong buy” rating, as per LSEG data. The median price target stood at USD 175, implying that analysts expect a 33% increase from the stock’s Wednesday close.

Nvidia shares recently traded at about 29 times their forward earnings, down from more than 80 two years ago, as rising earnings pull down the premium at which the stock trades. Rival Advanced Micro Devices AMD.O trades at about 22 times its forward earnings.

“At around 30x forward earnings the valuation still doesn’t look overcooked,” said Derren Nathan, head of equity research at Hargreaves Lansdown.

(By By Arsheeya Bajwa; Reporting by Alun John in London, Joel Jose, Sruthi Shankar and Arsheeya Bajwa in Bengaluru; Additional reporting by Deborah Sophia; Editing by Amanda Cooper, Saumyadeb Chakrabarty, Sriraj Kalluvila and Daniel Wallis)

Dollar jumps as Trump tariffs loom

NEW YORK – The dollar jumped on Thursday and was poised for its biggest daily percentage gain in more than two months as US President Donald Trump’s latest tariff comments overshadowed signs of slower economic growth.

The greenback initially pared gains after data showed weekly initial jobless claims rose by 22,000 to a seasonally adjusted 242,000, above the 221,000 estimate of economists polled by Reuters.

Other data from the Commerce Department showed gross domestic product increased at a 2.3% annualized rate last quarter after accelerating at a 3.1% pace in the July-September quarter in its second estimate of the data.

But the dollar quickly rebounded after Trump said 25% tariffs on Mexican and Canadian goods will go into effect on March 4 as scheduled because drugs are still pouring into the United States from those countries.

“It’s a world where people do not know what’s going on, so they will wait for clarity before they commit to bigger investments, and that leaves foreign exchange a little bit sidelined and a little bit more prone to these kind of quick catch-ups,” said Bob Savage, head markets strategist at BNY in New York.

“Tariffs will confuse people about what it means for the economics of the world and who’s going to get hurt the most and who wins and who loses, and there’s going to be a lot of noise and dust to figure out before anyone comes through all of that,” Savage added.

The dollar index, which measures the greenback against a basket of currencies, climbed 0.72% to 107.23, on track for its biggest daily percentage gain since December 18. The euro slumped 0.74%, on pace for its biggest drop since January 2, to USD 1.0405.

Prime Minister Justin Trudeau said Canada “will have an immediate and extremely strong response” if the United States imposes tariffs on Canadian imports next Tuesday.

The Canadian dollar weakened 0.69% versus the greenback to CAD 1.44, and the Mexican peso was off 0.12% versus the dollar at 20.464.

The greenback had fallen earlier this week nearly 4% from a more than two-year high in January on renewed worries about US economic growth and inflation as Trump shifted tariff deadlines on Canada and Mexico. Investors are also bracing for the labor market impact from actions by the Department of Government Efficiency under Elon Musk.

The path of interest rate cuts by the Federal Reserve has become less clear, with markets pricing in 58 basis points of easing by year-end, and a cut of at least 25 bps not topping 50% until the June meeting.

Federal Reserve Bank of Cleveland President Beth Hammack said she expects US central bank interest rate policy is on hold for the time being. Philadelphia Federal Reserve Bank President Patrick Harker expressed support for continuing to hold short-term U.S. borrowing costs in their current range.

The European Central Bank is expected to cut rates next week to 2.50%, according to all 82 economists polled by Reuters who expected two further cuts by mid-year.

Against the Japanese yen, the dollar strengthened 0.52% to 149.85. Bank of Japan Governor Kazuo Ueda told reporters at the close of a Group of 20 finance meeting in South Africa it was notable that many countries had warned of high global economic uncertainty.

In cryptocurrencies, bitcoin fell 0.66% to USD 83,896.18 after falling to USD 82,156.99 on Wednesday, its lowest since November 11.

(Reporting by Samuel Indyk and Brigid Riley; Editing by Shri Navaratnam, Sam Holmes, Kevin Liffey, Alex Richardson, Will Dunham and Richard Chang)

ECB fixes outage in multi-trillion-euro payment system

LONDON/FRANKFURT – The European Central Bank said late on Thursday it had fixed an unprecedented outage in its payment system which had left transactions likely worth trillions of euros from companies, consumers and investors up in the air for most of the day.

The malfunction of the Target 2 system, used to settle more than 3 trillion euros (USD 3.12 trillion) of daily payments and financial trades, meant transactions between banks could not go through.

While the interruption had not been felt by regular bank customers, it had put a question mark on the transactions between lenders that are completed at the end of the day and underpin the very functioning of the euro zone’s economy.

The event caused disruptions during US trading hours, according to a source at one US lender. There are still expectations that the backlog could be cleared during the extended settlement hours which could make the overall impact muted, the source added.

Another US bank said it was processing backlogs without issue after the ECB restarted the system.

After a hiatus that lasted roughly seven hours, the ECB said around 1800 GMT that Target 2 (T2) was functioning normally although all the deadlines to settle the day’s payment flows had been postponed by several hours.

“The previous incident has been resolved and T2 has resumed normal operations,” the ECB said in a status update on its website.

In a statement to Reuters earlier, the ECB said the unprecedented issue had been caused by a “hardware defect” and there was no “malicious (or) foul play”.

Banks, which depend on the system to settle their accounts with one another, had been instructed to keep placing their payments in the queue throughout the day as they waited for the outage to be fixed.

An emergency channel had remained open for “very critical payments”, the ECB said.

The pan-European TARGET 2 Securities (T2S) platform, which is used to complete trades in cash and securities across 24 depositories such as Euroclear, was also back online after being affected by a glitch in its communication channels.

“T2S is operating normally and the previous incident… was resolved,” the ECB said.

The cut-off time for Thursday’s trade had been pushed back by six hours to 2100 GMT.

Trading sources said communications had been disrupted and the status of trades since the outage was reported remained unclear.

The problem affected critical communications between central securities depositories (CSDs), the basic plumbing of financial markets.

Market participants usually communicate with T2S via their CSD or central bank.

Michael Thomas, a partner at Hogan Lovells’ financial services team and market structure expert, said the episode could have a wide variety of consequences.

“Where there are chains of transactions, where each leg is dependent on settlement of each other leg, a break in the chain can affect the whole series of transactions,” he said.

“The longer the delay, the greater the impact on liquidity in the financial system, where cash cannot be realized because securities transactions are not able to settle, meaning that cash is not available for other purposes,” he said.

According to the ECB’s website, any issues with the T2S system in the past couple of years have typically been resolved quickly. Thursday’s outage was reported at 0730 GMT and was only resolved at around 1700 GMT.

European stock, currency and bond markets appeared to have traded normally, according to LSEG data.

Settlement on trades takes two working days, which might mean disruption may not show up until early next week.

Central counterparties, or clearing houses, ensure that a stock, bond or derivatives transaction is completed. The final leg of a trade, known as settlement, is conducted by the CSDs.

One CSD, Clearstream, said on its website that settlement of euro securities would be delayed. Others including Euroclear did not immediately respond to a request for comment from Reuters.

A person familiar with the matter said some Euroclear clients might see delays in the processing of their transactions.

(USD 1 = 0.9607 euros)

(By Sinead Cruise, Amanda Cooper and Francesco Canepa; Additional reporting by Lucy Raitano and Samuel Indyk in London and Lefteris Papadimas in Athens and Nupur Anand in New York; Writing by John O’Donnell; Editing by Harry Robertson, Philippa Fletcher, Nia Williams and Daniel Wallis)

S&P 500 ends barely changed; Nvidia shares up after the bell

NEW YORK – The S&P 500 ended little changed on Wednesday ahead of quarterly results from Nvidia, whose positive outlook could set the tone for the artificial intelligence sector.

Stocks lost ground in afternoon trading, with investors digesting the latest comments from US President Donald Trump on tariffs.

Trump said on Wednesday his administration would soon announce a 25% tariff on imports from the European Union. He also raised hopes for another pause on steep new tariffs on imports from Mexico and Canada by saying they would take effect on April 2, about a month later than the deadline next week.

After the closing bell, Nvidia’s shares were up about 2% in choppy trading. The AI tech leader forecast first-quarter revenue above market estimates.

Nvidia’s stock ended the regular session up 3.7%, while an index of semiconductors was up 2.1% on the day.

The launch and popularity of low-cost AI models from China’s DeepSeek had rattled the industry in January and raised questions around US companies’ heavy investments in the technology.

Any upbeat comments by Nvidia on demand will elevate stocks of companies investing heavily in AI, said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta. “It’s become the biggest tech report.”

The Dow Jones Industrial Average fell 188.04 points, or 0.43%, to 43,433.12, the S&P 500 gained 0.81 points, or 0.01%, at 5,956.06 and the Nasdaq Composite rose 48.88 points, or 0.26%, to 19,075.26.

Gains in technology shares were offset by losses in healthcare, consumer staples and other sectors.

Nvidia’s results came near the end of a stronger-than-expected earnings period for S&P 500 companies.

“It’s been a pretty constructive earnings season,” said Tom Hainlin, senior investment strategist at US Bank.

A Reuters poll showed strategists still expect the S&P 500 to finish 2025 about 9% above current levels, although market volatility will persist.

Since last week, a series of data releases, including Tuesday’s weak consumer sentiment report, have hinted that the world’s largest economy might be stalling despite inflation remaining high, keeping investors on the edge.

Intuit shares rose 12.6% after the TurboTax maker forecast third-quarter revenue above Street estimates.

Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE. There were 91 new highs and 115 new lows on the NYSE. On the Nasdaq, 2,502 stocks rose and 1,917 fell as advancing issues outnumbered decliners by a 1.31-to-1 ratio.

Volume on US exchanges was 14.58 billion shares, compared with the 15.4 billion average for the full session over the last 20 trading days.

(Additional reporting by Johann M Cherian and Sukriti Gupta in Bengaluru; Editing by Devika Syamnath and Richard Chang)

Oil falls, settles at 2-month low as US fuel inventories rise

NEW YORK – Oil prices fell to two-month lows on Wednesday as a surprise build in US fuel stockpiles signaled demand weakness and a potential peace deal between Russia and Ukraine continued to weigh on prices.

Brent crude settled down 49 cents, or 0.67%, at USD 72.53 a barrel. US West Texas Intermediate crude oil futures fell by 31 cents, or 0.45%, to USD 68.62.

Both benchmarks settled at their lowest since December 10.

US gasoline and distillate inventories posted surprise builds last week even though crude oil stockpiles fell unexpectedly as refining activity ticked higher, the Energy Information Administration said.

“We had a knee-jerk reaction down to the low. It was a bit of a surprise because the crude oil number was a pretty big draw,” said Bob Yawger, director of energy futures at Mizuho.

Prospects for a peace deal between Russia and Ukraine are improving, ING commodities strategists said in a note, adding the market was also watching for implications of a minerals deal between the US and Ukraine.

“This would take us a step closer to Russian sanctions being lifted, removing much of the supply uncertainty hanging over the market,” the note said.

Downside risks on oil prices increased because of US President Donald Trump’s policies, such as initiatives to support higher oil exports by Iraq, said Saxo Bank analyst Ole Hansen. Trump’s tariff policies could also trigger a trade war and curb economic growth, Hansen added.

The US and Ukraine agreed on terms of a draft minerals deal central to Trump’s efforts to bring a swift end to the war in Ukraine, sources familiar with the matter told Reuters on Tuesday.

Fears that a trade war could slow demand have eased worries about tighter near-term oil supply despite fresh US sanctions against Iran, ANZ Bank analysts said in a note.

Trump announced a reversal of concessions given to Venezuela by former President Joe Biden in 2022.

The Biden administration allowed Chevron to expand its production in Venezuela and bring the country’s crude oil to the US.

(Reporting by Nicole Jao and Shariq Khan in New York, Enes Tunagur in London, and Jeslyn Lerh in Singapore; Editing by David Goodman, Rod Nickel, and David Gregorio)

US dollar rises as economic, tariff outlook gauged

NEW YORK – The US dollar rose on Wednesday to move further from recent 11-week lows, as investors assess the strength of the economy and tariffs outlook after the most recent comments from US President Donald Trump.

The greenback stumbled on Tuesday as economic data showed a sharp drop in consumer confidence, the latest in a string of data points that have prompted concerns about the strength of the US economy and persistent inflation, and caused US Treasury yields to tumble.

The benchmark 10-year US Treasury yield plunged nearly 10 basis points (bps) on Tuesday and was last down 4.2 basis points to 4.256% after falling to 4.249%, its lowest since December 11 as an earlier attempt to stabilize dissipated.

“We’ve had a pretty good sell-off since January, a lot of that’s been fueled by the adjustment lower in US real rates, which was largely fueled by the underperforming data we’ve been seeing, including yesterday,” said Brad Bechtel, global head of FX at Jefferies in New York.

“We’re at a stage now where we’re probably just going to chop around for a bit until we hear more about what’s actually happening with tariffs.”

The dollar index, which measures the greenback against a basket of currencies, rose 0.21% to 106.46, with the euro down 0.26% at USD 1.0486.

The greenback had fallen nearly 4% from a more than two-year high hit in January as worries have emerged about US economic growth as well as inflation, as investors deal with shifting tariff deadlines by Trump on Canada and Mexico. Investors are also bracing for the labor market impact from actions taken by Elon Musk’s Department of Government Efficiency.

The Canadian dollar weakened 0.9% versus the greenback to C$ 1.43 while the Mexican peso strengthened 0.3% versus the dollar at 20.406.

Trading in both currencies was choppy after Trump said at a cabinet meeting that they would take effect on April 2, but a White House official, however, said the March 4 deadline for the tariffs on Mexican and Canadian goods remained in effect “as of this moment.”

Even with the recent declines, the dollar has risen in three of the past four sessions and “the market is still respecting the fact that there’s an underlying bid tone to the dollar overall, and that’s kind of why we’re holding in around 106 for now,” said Bechtel.

Markets are currently pricing in 57 bps of rate cuts from the US Federal Reserve by the end of the year, with expectations for a cut of at least 25 bps not topping 50% until the June meeting.

Richmond Federal Reserve President Tom Barkin said on Tuesday he will follow a wait-and-see approach regarding central bank interest rate policy until it is clear inflation is returning to the Fed’s 2% target given the current uncertainty surrounding the economy.

The US Commerce Department said on Wednesday that new home sales plunged 10.5% to a seasonally adjusted annual rate of 657,000 units last month, short of the 680,000 estimate of economists polled by Reuters, hurt by persistently high mortgage rates and unusually cold weather in some parts of the country.

Investors were also eyeing any peace talks over Ukraine, which could affect the euro area economy and the single currency.

Ukraine said on Wednesday it had reached a “preliminary” deal to hand revenue from some of its mineral resources to the United States, before an expected trip to Washington by President Volodymyr Zelenskiy on Friday.

Against the Japanese yen, the dollar weakened 0.04% to 148.96 after falling to 148.56 on Tuesday, its lowest since October 11.

Sterling strengthened 0.09% to USD 1.2677. Bank of England policymaker Swati Dhingra said the BoE’s response to higher tariffs and other trade restrictions will depend on the extent supply chains are disrupted and not just increasing costs, as higher tariffs would likely be offset by softer global growth in the short-term.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski and Daniel Wallis)

Yields, stocks sag as ‘Tariff Man’ flexes muscles, Nvidia reports

The Asia-Pacific economic and corporate calendar is virtually empty on Thursday, allowing investors to take their cue from global drivers, two of which stand out above all others – Nvidia’s earnings and US President Donald Trump’s latest musings on tariffs.

Nvidia reported fourth-quarter earnings after the market close on Wednesday. Revenue grew 78% to USD 39.3 billion, beating estimates of USD 38.04 billion, and the firm’s forecast for first-quarter revenue was also above market estimates. Shares in the artificial intelligence poster child were little changed in choppy, after-hours trading.

Shares in Wall Street’s ‘Magnificent Seven’ and Big Tech more broadly – the runaway market winners over the last two years – have been under heavy pressure this year as investors rotate into unloved sectors at home and cheaper markets abroad.

Indeed, the ‘Mag 7′ this week entered correction territory having fallen more than 10% from their recent peak, so recovery hopes rested almost exclusively on Nvidia. Tech bulls may be disappointed.

Also in US tech, Tesla shares have shed nearly 20% in less than a week, slammed on the news that the electric car maker’s sales in Europe nearly halved last month. Some analysts suggest the slump was due to frustration in Europe about CEO Elon Musk’s close ties to Trump and political involvement in European countries’ domestic affairs.

Investors were on the defensive before Nvidia’s results, after Trump said earlier that he will soon announce a 25% tariff on imports – “on cars, and all of the things” – from the European Union.

Trump also said that steep new tariffs on imports from Mexico and Canada will go ahead on April 2, a month later than he had initially indicated. But a White House official later clarified that the March 4 deadline remained in place “as of this moment”.

‘Tariff Man’ is not for turning. Not yet anyway.

It was interesting to note that although Wall Street opened firmer on Wednesday and was recouping some of its losses from earlier this week, Treasuries didn’t budge. This suggests the fleeting equity rebound was more short-covering than anything else, and that the bond market wasn’t changing its view.

But bond investors did react to Trump’s tariff remarks. The renewed decline in yields suggests they believe escalating trade tensions will hit growth more than they will stoke inflation. At least in the near term.

Most equity markets in Asia, except Japan, posted solid gains on Wednesday. But the region is set to slide into the red at the open on Thursday as investors play safe. Treasuries up, dollar up – the big macro moves in US regular trading hours on Wednesday don’t get much safer.

Here are key developments that could provide more direction to Asian markets on Thursday:

– Fallout from Trump’s latest tariff threats

– G20 finance ministers, central bank governors meeting

– US GDP (Q4, second estimate)

(By Jamie McGeever, editing by Bill Berkrot)

S&P 500 to end 2025 up 9% from here, but Trump-related uncertainties mount

NEW YORK – The S&P 500 will finish 2025 up about 9% from now, but volatility will likely increase as a barrage of tariff announcements, job cuts and policy changes from President Donald Trump fuels uncertainty, according to equity strategists in a Reuters poll.

The year-end target of 6,500 for the benchmark S&P 500, the median forecast of 54 equity strategists, analysts, brokers, and portfolio managers collected February 13-25 is unchanged from a Reuters equity poll in November.

That is 9% above Tuesday’s close of 5,955.25.

The index is up 1.3% so far in 2025 following two straight years of gains exceeding 20%, helped largely by gains in megacap tech companies like Nvidia dominating the race for artificial intelligence technology.

Strategists said they expect solid corporate earnings growth to continue to support gains in equities and they see a possible boost to the economy if Trump, who took office on January 20, goes ahead with his pro-growth agenda for tax cuts and deregulation.

But they say tariffs threaten to add inflationary pressures at a time when the Federal Reserve has paused its rate-cutting cycle.

“The economy is growing, inflation has been sticky but it’s much lower than it was just six months or a year ago, and corporate profits are growing,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan, which has a 6,500 “base case” year-end forecast for the S&P 500.

“What could derail some of that are the tariffs. That, to us, is the biggest known unknown for markets and investors,” he said, noting that for now investors may be viewing the tariff announcements as “a negotiating tactic.”

Trump has rolled out a new 10% levy on all Chinese imports and announced tariffs on global steel and aluminum imports.

He said on Monday his proposed tariffs on Mexico and Canada were still set to start next week, and has said he plans to introduce 25% tariffs on autos, semiconductors, and pharmaceutical imports.

More recently, worries about a slowdown have emerged. Data on Tuesday showed US consumer confidence deteriorated at its sharpest pace in 3-1/2 years in February while 12-month inflation expectations jumped.

Also, thousands of US government workers have been fired in recent weeks as part of Trump’s plan to reduce the federal workforce, although those losses have mostly not appeared yet in formal measures of the US job market.

The cuts are being carried out under the direction of Tesla Chief Executive Elon Musk’s Department of Government Efficiency.

Moreover, Trump has verbally supported Russia as he has pushed for a deal to end Russia’s conflict with Ukraine, and has denounced the Ukrainian president as a dictator, creating alarm among some investors about relations between the US and the rest of the world.

When asked whether a stock market correction of at least 10% is likely in the coming three months, 13 of 19 poll participants who answered the question said it was likely or highly likely, while six said it was unlikely.

“Those with a short-term horizon, they could be a little rattled by volatility. We just have so many unknowns as we start 2025,” said Kristina Hooper, chief global market strategist at Invesco in New York. She expects the S&P 500 to end this year at 6,360.

Still, she said, “policies are probably going to be less important than what’s fundamentally happening”, such as with earnings.

Analysts expect S&P 500 earnings growth of 11.1% in 2025, compared with 11.7% in 2024, with growth for the final quarter of 2024 set to be the highest since 2021, according to LSEG.

Even after a choppy start to 2025, the S&P 500 is trading at a multiple of about 22 times forward earnings, compared with a 10-year average price-to-earnings ratio of about 18, based on LSEG data.

Strategists continued to cite financials as among their top sector picks for 2025, partly because of prospects for deregulation under Trump.

The poll has the Dow Jones industrial average finishing this year at 47,024, up from 46,600 in the Reuters November poll. The index closed at 43,621.16 on Tuesday.

(Reporting by Caroline Valetkevitch; additional reporting by Chuck Mikolajczak, Stephen Culp, Sinead Carew, Noel Randewich, Chibuike Oguh, and Alden Bentley; Polling by Sarupya Ganguly and Jaiganesh Mahesh; Editing by William Maclean)

US yields retreat as Trump may delay tariffs, after solid auction

NEW YORK – US Treasury yields fell on Wednesday, after trading higher for most of the session, following solid demand for the seven-year note auction and news that potential US tariffs on Mexico and Canada would only take effect on April 2, about a month later than an earlier deadline.

Earlier this month, the Trump administration had set March 4 as the effective date for 25% duties on goods from Mexico and non-energy goods from Canada. US President Donald
Trump made the remarks about tariffs during his administration’s first cabinet meeting.

In afternoon trading, the yield on the benchmark US 10-year Treasury note fell 4.9 basis points (bps) to 4.258%. The two-year US Treasury yield, which typically moves in step with interest rate expectations, fell 1.6 basis points to 4.08%.

Strong demand in the USD 44 billion seven-year note auction on Wednesday, adding to successful sales of five-year and two-year notes earlier in the week contributed to falling yields on Wednesday, said Eric Jussaume, director of fixed income at Cambridge Trust Wealth Management, a division of Eastern Bank.

Post-auction, US seven-year notes were down 4.9 bps at 4.164%.

In other parts of the bond market, one segment of the US Treasury yield curve seen by some analysts as a possible recession indicator briefly inverted for the first time this year on Wednesday. The spread between yields on two-year and five-year US Treasuries was last at 0.3 bps.

Markets will look at GDP and durable orders data due on Thursday to see if there are stronger signs of slowdown in the US economy that could accelerate the expected pace of interest rate cuts. A key element for Treasury yields on the near term will be the US Personal Consumption Expenditure (PCE) inflation rate, the Federal Reserve’s preferred inflation gauge, to be released on Friday.

“The bond market is still more prone to rallying, as the scenario with potential interest rate cuts later in the year has not changed,” said Ralph Axel, interest rates strategist at BofA Securities. Axel cites swap rates that reflect market expectations of a 60-bp rate reduction in 2025.

According to the CME’s FedWatch tool, the highest odds for the first 25-bp rate cut are in June’s Fed meeting, with a 53% probability. On Wednesday afternoon, the highest probability for a second rate cut was in the September meeting, with 37%.

The House passed late on Tuesday a version of the budget to advance the administration’s USD 4.5 trillion tax-cut plan. The plan calls for spending cuts, but their size and effect on the deficit are still unclear.

“The initial bill passed on the House would increase the deficit,” Cambridge Trust’s Jussaume said.

Treasury Secretary Scott Bessent said on Tuesday that Trump’s economic agenda would help bring down interest rates, particularly on the benchmark 10-year Treasury note, by restoring market confidence in the long-term US fiscal profile.

Padraic Garvey, ING’s head of global rates and debt strategy, said investors have yet to see big effects of the savings of the Department of Government Efficiency (DOGE) on spending, and a clear path for deficit reduction. This year, spending has been higher than in the same period a year earlier.

(Reporting by Tatiana Bautzer; Editing by Gertrude Chavez-Dreyfuss, Hugh Lawson, and Marguerita Choy)

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