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, especially the energy sector, which is vulnerable to global trade disruptions. Investors are concerned about potential earnings declines due to increased costs, prompting a shift towards a more cautious investment approach. This has resulted in value stocks underperforming growth stocks, as the latter are seen as having better long-term prospects despite short-term volatility. Additionally, small-cap stocks are lagging behind large-cap stocks, as they are more susceptible to cost pressures from tariffs.
The Vanguard S&P 500 ETF (VOO) closed at $553.32, down 0.54% from its previous close of $556.30, and is currently trading at $553.26 as of 16:20 on Friday, January 31.