The announcement of new tariffs set to take effect on February 1 has triggered a risk-off sentiment across US equity markets, with the S&P 500 experiencing a decline in breadth. Most sectors, particularly energy, are facing downward pressure due to concerns over increased costs and potential earnings declines. This cautious environment has led to value stocks underperforming growth stocks, as investors perceive the latter to have better long-term prospects despite short-term volatility. Additionally, small-cap stocks are lagging behind large-cap counterparts, as they are more vulnerable to cost pressures from tariffs. The market's fear premium has risen, with increased demand for downside protection reflected in the VIX and implied volatility.
The SPDR S&P 500 ETF (SPY) closed at $601.82, down 0.53% from its previous close of $605.04, and is currently trading at $601.67 as of 16:20 on Friday, January 31.