Markets slide amid tariff and inflation anxiety

Dow retreated  444 (near session lows), decliners over advancers about 3-1 & NAZ sank 268.  The MLP index fell 3+ to 319 & the REIT index was off 1+ to the 406s.  Junk bond funds drifted lower & Treasuries saw more selling which raised yields.  Oil crawled high to about 71 & gold was up 9 to 2886 (more on both below).

Dow Jones Industrials

Ford (F) announced its 4th-qtr earnings this week, & while they came in above expectations, the automaker signaled the losses in its electric vehicle (EV) division are projected to continue this year.  Ford reported that its battery factory, known as Model e, lost $5.1B in 2024. In its full-year outlook for 2025, Ford said that it expects adjusted earnings before interest & taxes (EBIT) of $7-8.5B, with free cash flows of $3.5B & $4.5B & capital expenditures of $8-9B.  When Ford broke down its various segments, it noted an EBIT loss of $5-5.5B for Model e.  That is offset by positive EBIT of $7-$8B from Ford Pro & $3.5-4B from Ford Blue, as well as earnings before taxes of $2B from Ford Credit.  House noted that while Ford Model e's volumes are up, there are about $1B in additional costs related to its BOSK battery factory & engineering for its generation 2 EV products.  House went on to discuss some of the factors putting pressure on the division, as well as some positive developments at the end of last year.  "Some of the downward pressure that you continue to see, that's on the pricing potentially in Europe, potentially in North America," she said.  "What's been great though is Model e as it ended Q4 last year, the [Mustang] Mach-E, we had fantastic selling – over 30% increase quarter over quarter, and we stayed above the average transaction prices.  So, while we're seeing the pressure, we have been continuing to do well even with our Gen-1 products in our sales pace."  "We expect a loss of $-5.5B for Ford Model e, holding losses stable year over year," said Sherry House, Ford's incoming CFO who is currently a VP of finance at the company.  "While industry pricing pressure remains, we plan to materially increase our global volume, driven by the full-year impact of European launches, and we significantly increased investment in our battery facilities and next-generation products, which are just two years away."  The stock fell 2¢.

Ford expecting mounting EV losses this year

Federal Reserve officials said the US job market is solid & noted the lack of clarity over how Pres Trump's policies will affect economic growth & still-elevated inflation, underscoring their no-rush approach to interest rate cuts.  Today the Labor Dept reported a 4% unemployment rate last month & the addition of 143K jobs, a picture "consistent with a healthy labor market that is neither weakening nor showing signs of overheating," Federal Reserve Governor Adriana Kugler said.  At the same time, she said, there is "considerable uncertainty" about the economic impact of new policy proposals, & "recent progress on inflation has been slow and uneven, and inflation remains elevated."  US inflation by the Fed's targeted measure, the 12-month change in the personal consumption expenditures price index, ticked up toward the end of last year, measuring 2.6% in Dec.  The Fed's target is 2%.  "The prudent step is to hold the federal funds rate where it is for some time, given that combination of factors," Kugler added.

Fed officials see healthy jobs market, no rate-cut rush

The number of Americans filing new applications for unemployment benefits increased moderately last week, consistent with steadily easing labor market conditions, though opportunities for those out of work are becoming scarce amid tepid hiring.  Initial claims for state unemployment benefits rose 11K to a seasonally adjusted 219K for last week, the Labor Dept said.  The forecast forecast was for 213K claims.  Labor market resilience is the driving force behind the economic expansion and has given the Federal Reserve room to pause interest rate cuts while policymakers assess the impact of the fiscal, trade & immigration policies of Pres Trump's administration, which economists view as inflationary.

US weekly jobless claims edge up; worker productivity growth slows

Gold prices rose & were on track for a 6th consecutive week of gains as escalating trade tensions between the US & China prompted investors to seek refuge in the safe-haven asset.  Spot gold gained 0.2% to $2861 per ounce, up more than 2% this week, after hitting a record high of $2886 earlier in the session.  US gold futures settled 0.4% higher at $2887.  Central focus of the gold market continues to be the uncertainty in regard to the Trump tariff policies.  Pres Trump this week kick-started a trade war as he followed thru on his threat to impose new duties on China, though he granted Mexico & Canada a 1-month reprieve.  Gold is often used as a safe investment during times of political & financial uncertainty.  The gold market also seems to have been buoyed by both continued growth in the People's Bank of China's gold holdings & a new Chinese program allowing insurance funds to invest in gold.

Gold poised for sixth week of gains on safe-haven demand

Oil futures rose from 2025 lows, but were on track for a 3rd straight weekly decline amid rising US inventories and concerns that higher US tariffs on China would hurt growth & demand for crude.  West Texas Intermediate crude for Mar rose 52¢ (0.7%) to settle at $71.13 a barrel, but was headed for a weekly decline of 1.9%.  Brent crude for Apr, the global benchmark, rose 55¢ (0.7%) to settle at $74.84 a barrel, on track for a weekly decline of 1.1%.  The US benchmark WTI fell near $70 a barrel on yesterday, finding strong dip buying interest this morning.   Both WTI & Brent ended yesterday at their lowest levels since Dec 27.  Concerns over Trump's trade policies after the imposition of an additional 10% tariff on China this week & uncertainty over further tariff moves threaten to damage the global growth outlook may support a deeper decline in crude prices.  Oil came under pressure early in the week after the US Energy Information Administration reported Wed that commercial crude inventories rose for a 2nd straight week, rising by 8.7M barrels for last week.

Oil Prices Set For Third Straight Weekly Decline Amid Concerns Over U.S. Tariffs, Inventories

Stocks fell as investors reacted to the threat of more possible tariffs from the Trump administration, while digesting a jump in consumer expectations for inflation & the quickly overshadowed monthly jobs report.  Pres Trump said he would soon announce a plan on reciprocal tariffs on American imports.  The comments were made during a meeting with Japan's Prime Minister Shigeru Ishiba.  Trump also said tariffs on Japan were an option.  The major gauges slid earlier into the red after US consumer sentiment sank to a 7-month low in early Feb, undershooting forecasts.  Inflation expectations jumped amid concerns about Trump's tariff threats.  Dow finished the week down 240.