Market Recap
On Friday, the S&P 500 closed at 6,040.53, down 0.5%, while the NASDAQ was flat (+0.28) to finish at 19,627.44. The Dow Jones Industrial Average slid 0.75%, closing at 44,544.66. Over the past week, the S&P 500 gained 1.2%, the NASDAQ surged 3.84%, and the Dow Jones rose 3.53%. Meanwhile, small caps, represented by the Russell 2000, jumped 4.57%, ending the week at 2,275.88.
DeepSeek introduced a free AI assistant that operates using less data and at a fraction of the cost of existing services. By January 27, 2025, this assistant had surpassed U.S. rival ChatGPT in downloads from Apple's App Store. This has triggered a massive selloff in tech stocks globally. Nvidia's shares plummeted nearly 17%, resulting in a record one-day loss of approximately $593 billion in market value. Other tech giants, including Broadcom, Microsoft, and Alphabet, also faced significant declines. The Philadelphia semiconductor index dropped 9.2%, marking its steepest decline since March 2020.
Meanwhile, significant policy changes are unfolding in Washington. With the appointment of Lee Zeldin as the head of the EPA, the Biden administration’s Green New Deal and EV mandates are expected to be rolled back swiftly. The Trump administration is now actively working to prevent states from setting their own vehicle emissions standards, aiming to establish a single federal regulation. (Source: EPA)
Adding to global economic uncertainty, Donald Trump has enacted sweeping tariffs starting today, February 1. The new trade measures include a 25% tariff on goods from Canada and Mexico and a 10% additional tariff on Chinese imports. These three nations represent some of America’s largest trading partners, and the economic repercussions are expected to be significant.
Tiff Macklem, the Governor of the Bank of Canada, warned that these tariffs could push Canada into a recession and lead to higher consumer prices in the U.S. Trump's stated goal is to encourage companies to shift production back to the U.S. by cutting red tape and lowering energy costs.
In Canada, the government views these policies as a direct threat to its net-zero agenda. Prime Minister Justin Trudeau has promised a “forceful and immediate response,” while former finance minister Chrystia Freeland has proposed retaliatory tariffs specifically targeting Tesla vehicles to put pressure on Elon Musk, one of Trump’s “billionaire buddies”, “Canada must threaten to impose a 100 percent tariff on all Tesla vehicles and a 100 percent tariff on US wine, beer, and spirits if unfair tariffs are imposed on Canadians,” Freeland said on Friday. (Source: Financial Times)
Beyond North America, Trump has also set his sights on the European Union, accusing the bloc of treating the U.S. “very badly.” Justifying additional tariffs, he stated, “They don’t take our cars, they don’t take our farm products, essentially, they don’t take almost anything.” When asked if he planned to impose tariffs on the EU, he responded emphatically: “Absolutely.” Trump said he would “eventually” put tariffs on chips and “things associated with chips”, and would apply tariffs to oil, gas, steel, copper, aluminium, and pharmaceuticals. Tariffs on steel and aluminium could come as soon as “this month, next month”, he said, while oil and gas tariffs would happen around February 18. (Source: Financial Times)
