The announcement of new tariffs set to take effect on February 1 has created a risk-off environment in the US equity markets, leading to a broad sell-off. The S&P 500 has been particularly affected, with most sectors experiencing declines, notably the energy sector, which is sensitive to global trade dynamics. The imposition of tariffs has raised concerns about potential earnings declines due to increased costs, prompting investors to adopt a more cautious stance. This has resulted in value stocks underperforming growth stocks, as the latter are perceived to have better long-term prospects despite short-term volatility. Additionally, small-cap stocks are lagging behind their large-cap counterparts, as smaller companies often have less diversified revenue streams and are more susceptible to cost pressures from tariffs.
The ProShares UltraPro S&P 500 (UPRO) ETF experienced a decline, dropping 1.72% to $94.55 at 16:20 on Friday, January 31.