Markets pared losses after the announced tariffs on imports from Mexico will be paused for a month. At the start of the session the S&P 500 fell below its 50-day moving average.

The Mexican president showed signs that she was reaching a deal with Trump, after they agreed to deploy 10,000 national guard troops to the border and tariffs were postponed for a month.

Tariffs on Canada are still in effect, with a Senior Government Official telling the NY Times that he is not optimistic the same will happen with Canada. Trudeau will be meeting with Trump at 3 PM EST.

In response to the recent tariffs headlines, the U.S. Dollar (USD) rose sharply against Canadian Dollar (CAD) and Mexican Peso (MXN). However, the Mexican Peso is showing signs of recovering after the postponement announcement.

Six out of eleven sectors are higher, with Health Care (XLV) coming out as the leader. Pressure on retailers and apparel names from tariff talks are driving major losses in Consumer Discretionary (XLY).

The Fear & Greed Index is still on the border between Fear and Neutral.

Economic Data

The ISM Manufacturing PMI rose to 50.9 in January from a downwardly revised 49.2 in December and above forecasts of 49.8.

Notable points:

• Employment rose to 50.3 from 25.4
• New Orders rose to 55.1 from 52.1
• Production rose to 52.5 from 49.9
• Prices rose to 54.9 from 52.5, the 4^th consecutive month to increase

Construction spending was very strong in December, increasing 0.5% M/M vs. consensus +0.1% M/M. November construction spending was revised up to 0.2% M/M from 0.0% M/M.

It is going to be another big week of earnings with 26% of the S&P 500 reporting this week.