Stock market slides on trade war jitters. Eyes turn to Trump's address to Congress
U.S. stocks closed sharply lower after President Donald Trump's 25% tariffs on Mexican and Canadian goods and an additional 10% tax on Chinese goods, bringing the total tariff to 20%, went into effect and spurred some retaliation.
China levied tariffs of up to 15% on some U.S. products, and Canadian Prime Minister Justin Trudeau said his country would also put a 25% levy on U.S. goods. Trump responded to Trudeau with a threat of even higher taxes. Mexico said it would announce retaliatory tariffs on Sunday.
Commerce Secretary Howard Lutnick suggested in a CNBC interview Tuesday morning that even more tariffs are coming for Canada.
The auto industry is seen as one of the biggest losers in this trade war with Canada and Mexico. Carmakers in the U.S. rely on those two countries for 80% of the imports of some key auto parts. Shares of GM lost 4.56% and Ford shed 2.88%.
The broad S&P 500 fell 1.22%, or 71.57 points, to 5,778.15, sinking even deeper into the red for the year and now, below its Election Day level when Trump won the presidency again. The blue-chip Dow dropped 1.55%, or 670.25 points, to 42,520.99; and the tech-laden Nasdaq dropped 035%, or 65.03 points, to 18,285.16. The benchmark 10-year yield rose to 4.212% as some investors sought safe returns.
Oil prices dropped for a third straight session on concerns that an escalating trade war will dampen energy demand and amid oil-producing countries saying they will boost production. Oil was last down 0.1% to $68.30. Brent crude sank to a six-month low.
Tuesday's stock slump comes on the heels of a steep drop on Monday in which the S&P 500 posted its largest one-day decline since December and dragged the index into the red for the year. The Nasdaq is nearing correction territory, or being down 10% from its record high.
Investors will be keen to hear what Trump says at his address to Congress Tuesday night.
Don't forget jobs data
Along with tariff jitters, investors are bracing for the key monthly jobs report due Friday morning.
“Although tariff talk will likely dominate this week’s news cycle, investors shouldn’t lose sight of the importance of the jobs report," said BeiChen Lin, investment strategist at Russell Investments. "If job creation were to match or exceed consensus expectations, it would be an important reassuring signal at a time when macroeconomic uncertainty is elevated.”
Lin said to watch for average hourly earnings to see if wage pressures cool. If so, that could help pave the way for more Federal Reserve rate cuts, he said.
Corporate news
- Walgreens Boots Alliance shares jumped 5.6% after The Wall Street Journal reported that it was nearing a deal to go private, citing people familiar with the matter.
- Target topped Wall Street's estimates for the last three months of the year, but 2025 so far has been rough, the retailer said. It warned of a “meaningful” profit drop in the first three months of the year compared to the year-ago period due to “ongoing consumer uncertainty,” soft sales in February and concerns around tariffs. Shares slid 3%.
- Illumina shares reversed losses and ended up 0.82%. Beijing said it would ban the U.S. biotech firm from exporting gene sequencers to China, after the Trump administration's additional 10% tariff on China on Tuesday.
- Tesla's sales of vehicles made in China dropped nearly 50% in February year on year, according to the China Passenger Car Association. Overall, the company sold more than 30,000 of those vehicles — the lowest level in more than two years. Shares of the EV giant tumbled 4.43%.
- Okta shares jumped 24.27% on a surprisingly strong ending to last year.
- Best Buy topped analysts' estimates during its fiscal fourth quarter but warned prices would rise in a tariff war with Mexico and China because those two countries are the company's top two supply-chain suppliers. Shares slid 13.26%, posting its worst single-day performance since March 12, 2020.
Cryptocurrency
Bitcoin rebounded during the day. Bitcoin developer Blockstream Corp. has secured a multibillion-dollar investment to launch three funds, including two that will enable crypto lending, according to Bloomberg, citing people familiar with the matter.
Bitcoin was last up 1.2% at $87,211.40, edging above the $85,000 level where the digital asset was trading when Trump announced his reserve plan.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.