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U.S. stocks rapidly made back ground after the U.S. and Mexico said tariffs against the trading partner would be paused for one month.

Stocks initially dropped Monday after President Donald Trump hit several countries with tariffs over the weekend, raising fears that a full-blown trade war would disrupt global supply chains, reignite inflation and slow the economy.

But losses were rapidly dissolving following the announced pause in the trade battle with Mexico.

The Dow Jones Industrial Average was traded just above the flatline, reversing earlier losses of 665 points. The S&P 500 shed 0.4% after being down as much as 1.93% earlier. The Nasdaq Composite slid 7%. Meanwhile, the iShares MSCI Mexico ETF (EWW) rebounded to rise 2%.

Trump on Saturday slapped a 25% tariff on goods from Mexico and Canada; energy imports from Canada will have a 10% tariff. Trump also placed a 10% levy on imports from China. Trump also signaled over the weekend that tariffs on the European Union would be imposed next.

But a post from Mexico’s President Claudia Sheinbuam following a conversation with Trump sparked an intraday comeback. “We had a good conversation with President Trump with great respect for our relationship and sovereignty; we reached a series of agreements,” Sheinbaum wrote in a post, according to a translation from Spanish.

And Trump shortly later confirmed the temporary deal on Truth Social. “It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States,” wrote Trump, adding that negotiations for a more permanent deal would continue for the month.

The pausing of the tariffs on Mexico reinforced the bullish view of some investors that tariffs for all countries could be Trump’s negotiating tool and that investors shouldn’t overreact initially.

“Call us deluded, but we still think that permanent tariffs on the U.S.’s allies (Canada, Mexico) will not be a thing,” said Thierry Wizman, global FX and rates strategist at Macquarie. “That’s because concessions are an ‘easier’ way to deal with Trump’s ‘problems’ (from a cost-benefit and game-theoretic perspective), and Trump likes to make ‘deals’. Political and market pressure will also weigh on the parties to make concessions, as in 2018.”

U.S. automakers with big North American supply chains like Ford and General Motors clawed back earlier losses. Shares of both companies were each last down 1.5%. Constellation Brands, a big importer of sprits from Mexico, was well off the day’s lows and down just 3%.

The emerging trade war comes as investors are dealing with the biggest stretch of fourth-quarter earnings reports and a key economic reading on the labor market this week. More than 120 companies in the S&P 500 are set to report their results, including tech names Alphabet, Amazon and Palantir, as well as consumer giants, including Walt Disney and Mondelez.  The January nonfarm payrolls report will be out Friday with economists polled by Dow Jones expecting that 175,000 jobs were added last month.

Tariffs could hurt economic growth, increase inflation, economists warn

Trump’s tariff plans could weigh on economic growth and cause inflation to jump, Wall Street economists warn.

Morgan Stanley economists estimate that “US Inflation could be 0.3 to 0.6pp higher vs baseline over the next 3-4 months (putting headline PCE inflation at 2.9% to 3.2%) and US growth could be -0.7 to -1.1pp lower vs baseline over the next 3-4 quarters (putting real GDP growth at 1.2% to 1.6%)” if tariffs are fully implemented and not temporary, strategist Michael Zezas said in a note to clients.

Check out more Wall Street reactions on CNBC Pro.

— Jesse Pound

Stocks making the biggest moves midday

Check out the companies making headlines in midday trading.

Tyson Foods — The poultry and beef giant gained 1.8% after the company’s fiscal first quarter results exceeded expectations. Tyson posted earnings of $1.14 per share, more than the 90 cents per share estimated by analysts polled by FactSet. Sales rose about 2.3% year over year, led by growth in the beef category.

Triumph — Shares soared 34% upon the news that the aerospace services supplier would be acquired by affiliates of Warburg Pincus and Berkshire Partners. Triumph shareholders will receive $26 per share in cash, making the deal worth around $3 billion total.

Read the full list here.

— Sarah Min

Boston Fed President Collins says there’s no hurry to cut rates further

With uncertainty running high and the economy looking strong, Boston Federal Reserve President said Monday that this is a time for policymakers to take their time.

“We’re seeing continued growth near trend, an economy that’s much more closely aligned, and a labor market where I see the indicators as suggesting we’re near full employment, and that’s a good place to be,” Collins said in a CNBC interview. “That means, in my view, that it’s really appropriate for policy to be patient, careful, and there’s no urgency for making additional adjustments, especially given all of the uncertainty.”

Collins spoke less than a week after the Federal Open Market Committee, where she is a voting member this year, decided to hold rates steady. Her remarks also came as financial markets weighed the impact of tariffs President Donald Trump is planning to levy against Canada and China, though he is delaying duties against Mexico.

“What we’re seeing this morning does really highlight that there’s a lot of uncertainty about how policies unfold, and without knowing what actual policy will be implemented, it’s just really not possible to be too precise about what the likely impacts are going to be,” Collins said.

—Jeff Cox

Trump tariffs could lead to lower earnings and valuations in the U.S. equity market, Goldman’s David Kostin says

David Kostin, chief U.S. equity strategist at Goldman Sachs, thinks tariffs could ultimately take a hit at S&P 500 earnings this season.

If U.S. tariffs were to be sustained, Kostin said they would “basically have an impact on earnings and also on valuation.” His recent analysis suggests that the earnings impact would likely reduce the firm’s earnings estimates by in between 2% and 3%, relative to a baseline, as well as the valuation of the U.S. equity market given an impact on higher equity risk premium uncertainty.

“So the impact in aggregate between earnings and valuation would be approximately 5%,” Kostin said Monday on CNBC’s “Squawk on the Street.” “Obviously that’s a fluid situation.”

— Pia Singh

Paul Tudor Jones says markets on shakier ground than Trump’s first term

Billionaire hedge fund manager Paul Tudor Jones believes the financial markets are far less stable entering President Donald Trump’s second term than they were back in 2017.

“There’s so many moving parts, and there’s so many things that are cross currents. The one thing that I would say is this is a completely, totally different landscape than Trump 1.0,” Jones said on CNBC’s “Squawk Box.” “I think Trump being Trump, I don’t know if it will play as well as it did in 1.0 because there’s no room for mistakes.”

The widely followed investor said fixed income, foreign exchange and equity markets have all gone through sea changes during the past eight years. Jones said it would take a maestro to introduce big policy changes and preserve the current state in the major asset classes.

— Yun Li

Stocks climb back from session lows, during which the Dow lost as much as 665 points

Major U.S. indexes are attempting a turnaround in midday trading after the earlier sell-off caused by concerns around the impact of U.S. tariffs.

Earlier in the session, the Dow Jones Industrial Average had lost 1.49%, or roughly 665 points, to reach an intraday low of 43,879.06. The S&P 500 had plunged as far as 1.93%, while the tech-heavy Nasdaq Composite shed 2.48% for its intraday low.

Shortly after 11:15 a.m. ET, the 30-stock Dow was down just 0.1%, while the S&P 500 and Nasdaq were down 0.6% and 1%, respectively.

— Pia Singh

VIX index pulls back after Trump announces 1-month pause on Mexico tariffs

On Monday morning, the Cboe Volatility Index, or VIX — Wall Street’s fear gauge — pulled back after Trump agreed to pause for one month his new 25% tariff on imports from Mexico.

The index was last trading just under 18. Earlier Monday morning, it had spiked to above 20.

— Lisa Kailai Han

Mexico ETF spikes higher, Canada stocks underperform

Mexico stocks as represented by the iShares MSCI Mexico ETF (EWW) popped 1.7% in midday trading, following losses earlier in the day, after Mexico President Claudia Sheinbaum said tariffs against the country would be delayed by one month.

The EWW was last hovering above 49. It started the day above 47.

On the other hand, the iShares MSCI Canada ETF (EWC) was last lower by 1.1%.

— Sarah Min

Manufacturing grew in December for the first time since September 2022

Factory activity in the U.S. expanded in January for the first time in more than two years, the Institute for Supply Manufacturing reported Monday.

The ISM manufacturing index posted a reading of 50.9%, representing the share of companies reporting growth for the month. That was 1.7 percentage points above the December level and better than the Dow Jones estimate for 50%. It reversed a trend of 26 straight months in contraction as the best number since September 2022.

Within the survey, the employment index leaped to 50.3, a gain of 4.9 points, while new orders and production also posted gains. The prices index rose to 54.9%, up 2.4 points.

—Jeff Cox

Five largest Canadian banks knocked hard in early U.S. trading Monday

The five largest Canadian banks, all of which are actively traded in the U.S., tumbled in early trading Monday in reaction to the U.S. imposing a 25% tariff on Canadian imports and Canada taking retailiatory action in response.

At Monday’s session lows, Canadian Imperial Bank of Commerce tumbled 8%,  Bank of Nova Scotia suffered a 7.5% decline, Bank of Montreal dropped 6%, Toronto-Dominion Bank lost 5% and Royal Bank of Canada sank 4.5%.

— Scott Schnipper

Citigroup slides twice as much as rivals as tariffs scramble Banamex plans

Citigroup dropped as much as 4.9% early Monday, roughly twice as much as its money center rivals JPMorgan Chase, Bank of America and Wells Fargo, as the imposition of 25% on Mexican imports into the United States potentially scrambled Jane Fraser’s plans to sell or take public its Banamex subsidiary there.

Citigroup in early December said it completed the separation of Banamex from its institutional banking business in Mexico in preparation to list the retail bank, Reuters reported at the time.

Citigroup is more exposed to higher tariffs and their effect on business activity than are other major U.S. banks, said Wells Fargo analysts led by Michael Mayo on Monday, although Citi doesn’t necessarily need to take Banamex public in an initial public offering in the second half of 2025, they said. “To us, Citi needs to keep its options open … for many years, we have thought a sale may be advantageous.”

Mexico as a whole represents an estimated 4% of Citigroup’s credit exposure, or $72 billion across all activities and businesses, Wells Fargo said, with one third of that eventually earmarked for a spinoff.

— Scott Schnipper

Tariffs expanding to Europe remain a looming fear for markets, says BMO Wealth Management

Markets are worried that President Donald Trump’s tariffs on China, Mexico and China could spill over to Europe and further stoke volatility, according to BMO Wealth Management’s chief investment officer, Yung-Yu Ma.

“The fear for markets is that the duration of this trade war could drag on and that escalation not only with Canada, Mexico, and China is possible, but that new fronts could emerge, such as tariffs on the European Union in areas such as pharmaceuticals, semiconductors and steel, are likely to be opened while the existing ones are raging. To call this a daring strategy is a tremendous understatement,” Ma said.

— Brian Evans

Stocks open in the red

Stocks traded lower Monday morning.

The Dow Jones Industrial Average fell 541 points, or 1.2%. The S&P 500 dropped 1.5%, and the Nasdaq Composite slipped 1.9%.

— Sean Conlon

Tech stocks fall

Tech stocks came under pressure in premarket trading Monday, with shares of the Technology Select Sector SPDR Fund (XLK) falling more than 2%.

The fund’s move lower was led by declines in Enphase Energy, Arista Networks and Super Micro Computer, with each falling more than 4%. Dell Technologies, Nvidia, Broadcom, Jabil, Teradyne and NXP Semiconductors were closely behind, all sliding more than 3%.

The XLK is also coming off a negative week after developments from Chinese artificial intelligence startup DeepSeek raised concerns over AI spending. The fund closed out last week by falling about 3.6% over the period. Year to date, it’s fallen nearly 1%.

— Sean Conlon, Gina Francolla

Dollar rises on the heels of Trump tariffs

The U.S. dollar rose Monday as Trump’s tariffs on Mexico, Canada and China raised concerns about a global trade war, with the dollar index gaining almost 1%.

The dollar hit a high of 7.36310 against the Chinese yuan offshore. That marks the highest level since Jan. 13, when the dollar traded as high as 7.36320 against the yuan offshore.

Additionally, the currency notched a new record high of 87.3 against the Indian rupee.

— Sean Conlon, Gina Francolla

Stocks making the biggest moves before the bell: Tyson Foods, Constellation Brands and more

These are the stocks moving the most in premarket trading:

Tyson Foods — The maker of Jimmy Dean sausage rose nearly 4% after fiscal first-quarter results topped expectations. Tyson reported earnings of $1.14 per share, above the 90 cents per share estimated by analysts, according to FactSet. Sales rose about 2.3% year over year, led by growth in the beef category.

Stocks moving on tariffs — U.S. stocks reacted to the new 25% tariffs Trump levied Saturday on goods from Canada and Mexico, and 10% on China, effective at midnight Monday. These names included alcoholic beverage maker Constellation Brands, down 6%, and General Motors, down 8%.

PVH — Shares of the Calvin Klein and Tommy Bahama parent slipped 3%. Wells Fargo downgraded the apparel maker to equal weight from overweight Monday, saying it feels like a value trap due to mounting issues.

— Lisa Kailai Han

Bitcoin falls after Trump imposes tariffs

Bitcoin declined 3% to the $95,000 level early Monday after President Donald Trump levied tariffs on goods coming from Mexico, Canada and China.

Stocks tied to the price of the cryptocurrency also dropped in the premarket. Crypto services provider Coinbase slid more than 6%, while bitcoin proxy MicroStrategy tumbled more than 7%. Meanwhile, miners Riot Platforms and Mara Holdings fell nearly 7% and more than 7%, respectively.

— Sean Conlon

Auto stocks fall on pressure from U.S. tariffs

Auto stocks fell in the premarket Monday, as traders weighed how the latest U.S. tariffs could hurt the industry.

General Motors lost more than 6%, while Ford Motor shed 4%. Engine maker Cummins and supplier stock Aptiv were also lower.

— Fred Imbert

European markets open lower

The pan-European Stoxx 600 index was 1.3% lower during early morning deals on Monday, as regional investors reacted to fresh tariff threats from U.S. President Donald Trump.

All sectors were trading in negative territory, with auto stocks sustaining heavy losses.

Markets in the region were reacting negatively to Trump’s decision over the weekend to slap 25% tariffs on imports from Mexico and Canada and a 10% levy on goods from China. Canada has retaliated with its own sanctions on U.S. imports, and Mexico has threatened to do the same.

When asked on Sunday about the prospect of tariffs on goods from the U.K. and European Union, Trump told the BBC that both were “out of line” but that the EU was worse. He said a deal could be “worked out” with the U.K., a country with whom the U.S. has a more balanced trade relationship, but stood firm that tariffs on the EU “will definitely happen.”

Read live updates on European markets here.

— Chloe Taylor

Global auto stocks plunge

Shares of auto giants fell sharply on Monday, after U.S. President Donald Trump imposed long-threatened tariffs on goods from Canada, Mexico and China, sparking concerns about the prospect of a global trade war.

He has suggested the European Union could be next to face tariffs.

Japanese auto giants Toyota and Nissan both fell more than 5% on Monday, while domestic rival Honda tumbled 7.2%. Shares of Japan-listed Mazda Motor Corp traded more than 7.5% lower, while Kia Motor Corp fell nearly 7%.

In Europe, shares of French car parts supplier Valeo and automaker Renault fell 8.3% and 4%, respectively, during early morning deals. Meanwhile, Germany’s BMW, Volkswagen and Porsche were all seen trading off by around 5%.

— Sam Meredith

U.S. dollar edges 1% higher after Trump tariffs

The U.S. dollar advanced nearly 1% on Sunday night, continuing gains since President Donald Trump implemented tariffs over the weekend. The currency is trading near five-year highs.

— Pia Singh

Gasoline futures follow oil prices higher

Another part of the energy market swung higher following the U.S. tariffs on Mexico, Canada and China. RBOB Gasoline futures were last up 3.3% at $2.1275 per gallon. The move shows traders expect these levies to drive up energy costs in the near term.

— Fred Imbert

Bitcoin falls, gold rises in risk-off move after U.S. tariffs

Traders appeared to search for safety in early Sunday night trading after the U.S. hit key trade partners with hefty tariffs on goods.

Bitcoin dipped back below $100,000, losing 3.6% to trade at $97,554.24. Gold, a traditional safe-haven asset, ticked 0.3% higher to $2,842.60 per ounce.

— Fred Imbert

Tariffs could make Super Bowl staples more expensive, economist warns

The U.S. tariffs on Mexican, Canadian and Chinese goods come about a week before the Super Bowl, perhaps the biggest U.S. sporting event of the year.

With these levies in place, Americans could see a substantial price hike when shopping certain staples consumed during the event, such as avocados, RSM U.S. chief economist Joe Brusuelas warned.

“Whether you make guacamole from scratch, as my grandmother Juanita liked to do, or buy pre-made spicy guacamole from [grocery store chain] Central Market in Austin, Tex., it’s going to cost more,” Brusuelas said.

“A seven-ounce package at Central Market, which currently costs $4.98, would jump to $6.22 if the 25% tariff were fully passed along to consumers like me,” he said. “Some producers and manufacturers may elect to absorb some of the cost of the tariffs, but at 25%, that cost is too big to completely absorb.”

— Fred Imbert, Jeff Cox

Canada, Mexico, China and Europe respond to Trump tariffs

The U.S. on Saturday imposed levies on imports from Canada, Mexico and China. Here’s how those countries, and the European Union, reacted:

— Katrina Bishop

Oil prices pop after U.S. hits Mexico, Canada and China with tariffs

Oil prices began Sunday trading higher after the U.S. slapped tariffs on goods from China, Canada and Mexico — all key trading partners.

West Texas Intermediate futures were up 2% at $74.20 per barrel. International Brent crude climbed 1% to $76.42 per barrel.

— Fred Imbert

Stock futures open sharply lower

Stock futures opened lower on Sunday night. Futures tied to the Dow Jones Industrial Average dropped 483 points, or 1.01%. S&P futures lost 1.9%, while Nasdaq futures shed 2.7%.

— Pia Singh

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