NEW YORK — On Thursday, Wall Street resumed its significant downward trend, shaken by the impact of President Donald Trump’s tariffs and prevailing economic uncertainties.
The S&P 500 plunged 1.8%, negating the modest recovery from the previous day and reinforcing the slide witnessed over recent weeks. As a result, the Dow Jones Industrial Average fell 427 points, marking a 1% drop, and the Nasdaq composite plummeted 2.6%, pushing it more than 10% below its peak reached in December.
This decline occurred despite President Trump announcing a temporary one-month reprieve from the 25% tariffs on various goods imported from Mexico and Canada. This differed from the market reaction a day earlier when stocks gained following a similar exemption directed specifically at automakers.
These developments perpetuate optimism that Trump’s tariffs might be a tactic for negotiation rather than an enduring strategy, supporting the hope that a severe trade war that could damage economies and increase inflation might be averted.
Nevertheless, Trump continues to forge ahead with other tariffs slated to be enforced on April 2, adding to the swirl of uncertainty. Trump had earlier asserted there was “no room” for negotiations to avert tariffs on Mexico and Canada that took effect earlier in the week.
Yung-Yu Ma, chief investment officer at BMO Wealth Management, commented, “These exemptions don’t do much to resolve the general air of uncertainty.” He noted that businesses are likely to adopt a cautious approach amid the prevailing confusion until tariff policies become clearer.
U.S. companies are expressing frustration over the “chaos” emanating from Washington, contributing to U.S. households bracing for potential inflation due to the tariffs, impacting their confidence levels.
According to BNP Paribas strategists, future impacts hinge on whether the new tariffs are temporary or moderated. However, they note, “Even if they are ultimately removed, we anticipate lasting damage to global economic activity.”
In response to inquiries on whether the tariff delays were linked to the market’s downturn, Trump stated, “I’m not even looking at the market.” In an Oval Office address, he attributed falling prices to “globalist countries and companies” affected by newfound trade policies.
A key report awaited by Wall Street is Friday’s employment data from the U.S. Labor Department, detailing February’s hiring figures. A strong job market, paired with robust consumer spending, has played a crucial role in steering away from recession fears. Economists project an uptick in hiring for the month.
Recent signals from large retailers, however, reflect concerns regarding the sustainability of U.S. consumer spending. Macy’s reported slightly disappointing revenue for late 2024 despite exceeding profit expectations. Its forecast for 2025 profits missed analyst predictions, causing its shares to dip by 0.7%.
Similarly, Victoria’s Secret outperformed fourth-quarter expectations but offered a more conservative revenue outlook for the following year, resulting in an 8.2% fall in its stock.
The ongoing struggles of major U.S. stock market powerhouses have further fueled downward momentum. Particularly hit were semiconductor companies and their suppliers, previously fueled by the surge of artificial-intelligence technology.
Marvell Technology saw a dramatic decline, losing nearly 20% of its value despite exceeding analyst projections for its latest quarter and forecasting over 60% revenue growth for the current quarter.
Nevertheless, investors seem disenchanted, having grown accustomed to AI companies surpassing expectations. Nvidia, a standout in the AI sector, fell 5.7%, and Broadcom dropped 6.3% ahead of its earnings announcement.
While AI giants previously propelled Wall Street to new heights, some critics argue that the lofty performances, such as Nvidia’s extraordinary ascent of 820% from 2023 to 2024, have led to inflated valuations. Furthermore, these companies are now facing competitive threats as Chinese firms develop their own AI technologies, with companies like DeepSeek saying they can go without the industry’s most expensive components.
Ultimately, the S&P 500 fell 104.11 points to close at 5,738.52. The Dow Jones Industrial Average dropped 427.51 points to 42,579.08, while the Nasdaq composite tumbled 483.48 points to 18,069.26.
Internationally, European stock markets showed mixed results, coinciding with the European Central Bank’s anticipated interest rate cut. German stocks increased by 1.5% amid ongoing government coalition negotiations aiming at relaxing constitutional borrowing constraints, signaling a potential shift in Germany’s fiscal policies.
In Asian markets, positive movements were observed, including a 3.3% rise in Hong Kong and a 1.2% increase in Shanghai. China’s commerce minister remarked that the country would not succumb to external pressure and remains resilient against higher tariffs imposed by the U.S., while emphasizing there are “no winners in a trade war.”
In the bond market, the 10-year Treasury yield saw a slight increase to 4.29% from 4.28% late Wednesday.
The evolving narrative around tariffs and economic conditions suggests a volatile environment that continues to influence market sentiments and global economic trajectories.