Wall Street on Friday closed out a strong week that saw the S&P 500 notch its first record closing high of the year. The event of the week was no doubt President Donald Trump’s inauguration on Martin Luther King Jr. Day. He immediately signed a slew of decrees, many of them undoing or targeting actions taken by Joe Biden’s previous administration. He reiterated his “make in America or face tariffs” message at the World Economic Forum in Davos and threatened Greenland with sanctions if they do not allow the US to annex their country. Later, in a Fox News interview at the Oval Office, Trump said he’d “rather not” put tariffs on China. For the week, the S&P 500 advanced 1.7%, while the Nasdaq also climbed 1.7%. The Dow sur ed 2.2%.
Despite the Trump volatility, the focus now turns to monetary policy, with the Federal Reserve’s first interest rate decision of the year scheduled this week.
Future Wealth’s View
Companies in the S&P 500 appear increasingly focused on tariff policies under President Donald Trump. There has been a recent surge in companies mentioning tariffs in their quarterly earnings calls which leads us to believe that we expect the issue to continue to be a source of volatility over the next several months.
Investors are worried that aggressive tariffs risk creating inflationary pressures and hurting economic growth. This concern is shared by the Fed as well and we will know how it affects monetary policy later this week. President Trump has voiced his opinion for an interest rate cut but will the Fed play ball?
You will not want to miss the Q&A with Chair Fed Powell on Wednesday Jan 29th or the tweets that will follow.