U.S. stocks took a significant hit on Monday after President Trump announced that tariffs on imports from Canada and Mexico would be implemented by the end of the day. This news caught investors off guard, as many hoped for a different approach that might ease global trade tensions. The market reacted sharply, signaling concerns about the strength of the U.S. economy.
The S&P 500 index dropped by 2% and was heading for its worst day in six months. The downturn began after Trump stated there was “no room left” for negotiations to reduce the proposed 25% tariffs. This followed a period of relative stability in the market earlier in the day.
The Dow Jones Industrial Average fell significantly, down 735 points, or 1.7%, with 45 minutes of trading left. The Nasdaq composite saw a bigger drop, down 2.6%.
This poor performance marks a turbulent time for Wall Street. Just last month, the S&P 500 reached record highs due to strong profit reports from U.S. companies. However, several recent reports indicated weaker economic performance, creating a backdrop of uncertainty. Many U.S. households seem to be growing more pessimistic about inflation, primarily due to the looming threat of tariffs.
A concerning report on U.S. manufacturing was released on Monday. Although manufacturers are still growing, the pace is slower than expected. More troubling is the drop in new orders, which suggest reduced demand. Prices are also rising as discussions heat up about who will shoulder the burden of the tariffs Trump has proposed.
Timothy Fiore, chair of the manufacturing survey committee at the Institute for Supply Management, noted, “Demand eased, production stabilized, and layoffs continued as businesses grappled with the impact of the new tariff policies.” Investors had been hopeful that Trump’s tariff threats were just negotiating tactics, and that he would opt for less harmful trade policies. However, the current market slide has particularly affected tech stocks, including Nvidia, which dropped over 9%, and Tesla, which fell by 4.3%.
In other news, Kroger’s shares fell 2.9% after the resignation of its CEO due to an internal investigation. Meanwhile, stocks linked to the cryptocurrency market initially rose but then dropped after news about Trump’s plans for crypto regulation became clearer. MicroStrategy, a company focused on buying Bitcoin, fell 3.1%, and Coinbase lost 5%.
Across the Pacific, manufacturers in China reported increased orders, as many rushed to beat higher U.S. tariffs. Additionally, a state media report suggested that China might retaliate against these tariffs.
In Hong Kong, a new bubble tea chain, Mixue Bingcheng, saw its stock soar 43% during its market debut, signifying strong investor interest. Elsewhere, European markets were on the rise, with a report indicating easing inflation in February. This could influence the European Central Bank to lower interest rates soon.
Germany’s DAX climbed by 2.6%, and France’s CAC 40 rose by 1.1%. Interestingly, stocks outside the U.S. have generally performed better this year, even amid Trump’s “America First” promises.
In the bond market, the yield on the 10-year Treasury note dropped to 4.16%, down from 4.24% right before the manufacturing report. This decline follows a trend since January when yields were close to 4.80%. Typically, lower Treasury yields can boost stock prices by making loans cheaper. However, given the current outlook, strategists at Morgan Stanley caution that this particular drop may not have the usual positive impact on stock prices.
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Canada, Financial markets, NVIDIA Corp., Mexico, Economic policy, Donald Trump, Rodney McMullen, International trade, Government policy, Economy, General news, Global trade, Washington news, Elon Musk, U.S. news, The Kroger Co., Michael Wilson, Morgan Stanley, World news, United States government, MicroStrategy, Inc., Timothy Fiore, Stocks and bonds, Business, Tesla, Inc., World News, U.S. News, Washington News
