S&P500

US stock market: correction underway

Benchmark stock indices on Monday:

Dow Jones: 0%

NASDAQ: -1.2%

S&P 500: -0.5%

S&P 500 is trading at 5,983 in the range of 5,800 to 6,200

Stock market recap

The US stock market showed mixed performance on Monday. In the morning, dip-buying provided some support, particularly to mega-cap stocks, but this momentum vanished until the end of the North American session.

By the end of the session, major stock indices settled near their daily lows:

The S&P 500 declined by 0.5%

The Nasdaq Composite fell by 1.2%

The Dow Jones Industrial Average edged up by just 0.1%, after having been up as much as 0.6% earlier in the session.

Market movers & Trump's tariffs announcement

Selling pressure intensified after President Trump announced at a press conference that tariffs on Mexico and Canada would be implemented as scheduled after a one-month delay. This announcement combined with a sharp sell-off in major high-tech stocks, including:

NVIDIA (NVDA 130.28, -4.15, -3.1%), ahead of its earnings report on Wednesday,

Microsoft (MSFT 404.00, -4.21, -1.0%),

Amazon (AMZN 212.71, -3.87, -1.8%)

The decline in these shares triggered a broader market pullback in the second half of the day.

Meanwhile, Apple (AAPL 247.10, +1.55, +0.6%) stood out among poor-performing stocks, announcing plans to invest more than $500 billion domestically over the next four years. Some analysts speculated that this commitment could potentially exempt Apple from upcoming tariffs.

Sector performance

Losses in NVDA and MSFT offset Apple's gains, causing the S&P 500 tech sector to close down 1.4%.

Declines in other large-cap stocks dragged down the consumer discretionary (-0.9%) and communication services (-0.6%) sectors.

In parallel, US Treasuries extended their rally on the back of the safe-haven buying trend from last week.

The 10-year Treasury yield fell by 3 basis points to 4.39%. The 2-year Treasury yield declined by 2 basis points to 4.17%.

The economic calendar contained no significant US economic reports on Monday, but several key economic data is scheduled for this week, including:

The Federal Reserve's preferred inflation gauge, the PCE price index which acts as a strong market catalyst, is due on Friday.

The economic calendar has the following reports on Tuesday

FHFA House Price Index for December (previous: 0.3%) is due at 9:00 AM ET;

S&P Case-Shiller Home Price Index for December (consensus: 4.4%; previous: 4.3%) is also due at 9:00 AM ET;

Consumer Confidence Index for February (consensus: 103.1; previous: 104.1) is due at 10:00 AM ET

Energy market update

Brent crude oil was trading at $75.10 per barrel. Oil prices rebounded above $75 as the US market sell-off paused, if not fully halted.

Conclusion

The US stock market has entered a correction phase after a slump on Friday. On Monday, the market did not gain bullish momentum. Buying opportunities may arise as the S&P 500 holds near key support levels. However, it would be wise to keep cash reserves in case of another wave of selling. I suggest the strategy of holding long positions from support levels. Please beware of potential selling pressure.