Wall Street’s major stock indexes plunged to multi-week lows on Monday in a broad selloff, as fears of an escalating trade war and its potential impact on the global economy rattled markets worldwide. The market turbulence followed President Donald Trump’s decision to impose significant tariffs on Mexico, Canada, and China.
Over the weekend, Trump announced a 25% tariff on imports from Mexico and Canada, along with a 10% tariff on Chinese goods, warning that the move could cause “short-term” pain for American consumers.
“The uncertainty at this stage is tremendous – not only of how these eventual negotiations will play out, but worries about how this is only the tip of the iceberg and more tariffs are on the horizon,” said Yung-Yu Ma, chief investment officer at BMO Wealth Management, in a mailed comment.
“It’s likely that the initial tariffs on Canada and Mexico are a negotiating template for what is to come.”
Dow Drops 620 Points
At 10:02 a.m. ET, the Dow Jones Industrial Average fell 620.66 points, or 1.39%, to 43,924.00, hitting a two-week low.
The S&P 500 lost 107.88 points, or 1.79%, to 5,932.65 and the Nasdaq Composite lost 431.21 points, or 2.20%, to 19,196.23. Both hit their lowest level in over two weeks.
All 11 S&P sectors traded lower, with information technology hitting a three-month low, bogged down by a 3.5% fall in Apple.
Chip stocks also slumped, with industry bellwether Nvidia sliding 5%, and a broader gauge of semiconductor stocks down 2.8%.
Legacy automakers – who had been roiled by the impending tariffs – dropped sharply. Ford fell 2.9%, while General Motors shed 4.7%.
The economically sensitive Russell 2000 smallcaps index fell 2.4% to a three-week low.
Treasury yields edged down as investors fled to safer assets such as bonds and gold. Spot gold scaled an all-time high.
The Cboe Volatility Index, known as Wall Street’s “fear gauge”, jumped to its highest level in a week.
Goldman Sachs estimates that every 5-percentage-point increase in the tariff rate would lower the S&P 500’s earnings per share by roughly 1% to 2%, and the latest tariff announcements could bring about a reduction in its forecasts for the S&P 500’s earnings by roughly 2% to 3%.
Several Highs And Lows
The quarterly earnings, meanwhile, remained in full swing, with Tyson Foods gaining 2.2% after the meat packer raised its annual sales forecast, while IDEXX Laboratories added 12.2% after the animal diagnostics maker beat fourth-quarter profit and revenue estimates.
Triumph Group jumped 32.2% after the aircraft parts maker said investment firms Warburg Pincus and Berkshire Partners have agreed to buy the company in a deal valued at about $3 billion.
On the data front, U.S. manufacturing grew for the first time in more than two years in January, with the Institute for Supply Management’s (ISM) reading at 50.9, rising above 50 for the first time since October 2022.
Declining issues outnumbered advancers by a 4.74-to-1 ratio on the NYSE, and by a 5.22-to-1 ratio on the Nasdaq.
The S&P 500 posted no new 52-week highs and 20 new lows, while the Nasdaq Composite recorded 13 new highs and 162 new lows.
(With inputs from Reuters)
