The announcement of new tariffs set to begin on February 1 has created a risk-off sentiment in the US equity markets, impacting the S&P 500. Investors are concerned about potential earnings declines due to increased costs, leading to a cautious stance. The energy sector, heavily reliant on global trade, has been particularly affected, contributing to the overall market decline. Additionally, the rise in the VIX and implied volatility indicates a growing demand for protection against downside risk, as traders reduce their exposure to equities ahead of the weekend. This environment has seen value stocks underperform growth stocks, with small-cap stocks lagging behind their large-cap counterparts due to their vulnerability to cost pressures from tariffs.
The Direxion Daily S&P 500 Bull 2X Shares (SPUU) experienced a decline, closing at $154.56, down 1% from the previous close of $156.12, and currently trading at $154.96, reflecting a 0.74% decrease as of 16:20 on Friday, January 31.