The S&P 500 closed lower on Monday, reversing from session lows after President Trump announced a temporary halt on tariffs against Mexico. Despite this, investors remained wary, reflecting ongoing concerns regarding global trade tensions.

Market Overview

• Dow Jones fell 161 points (-0.4%)
• S&P 500 declined by 0.9%
• Nasdaq Composite dropped 1.3%

Trump’s Tariff Delay Eases Some Fears

After a “very friendly” call with Mexican President Claudia Sheinbaum, Trump announced a 30-day delay on tariffs against Mexico, as the country agreed to increase border security with 10,000 National Guard troops.

Key Takeaways:

• Tariff Delay of 30 Days as negotiations continue.
• Existing tariffs on Canada (25%) and China (10%) remain in place.
• Mixed reactions in trade-sensitive sectors.

Inflationary Concerns Persist

Economists caution that these new tariffs could worsen U.S. inflation, creating higher chances that the Federal Reserve will refrain from cutting interest rates.

Capital Economics’ Outlook:
“Present tariffs will likely lead to faster and more substantial inflation growth than anticipated, limiting the Fed’s capacity to reduce rates over the coming year.”

Market Reactions to Tariff Developments

Trade-sensitive stocks, including major U.S. automakers and retailers, experienced some recovery from earlier losses.

• Automakers: General Motors (NYSE: GM), Ford (NYSE: F), and Stellantis (NYSE: STLA)

Investor Insight: The Sector P/E Ratio API provides valuable insights into industry reactions amidst ongoing tariff policies.