The financial market experienced a setback on Wednesday as declines in major companies such as Nvidia and Tesla pushed Wall Street lower. The S&P 500 dropped by 1.1%, halting its recent period of stability. In a tumultuous day, the Dow Jones Industrial Average shifted from an early gain of 230 points to a final loss of 132 points, or 0.3%. Meanwhile, large-scale losses in the tech sector contributed to the Nasdaq Composite experiencing a leading decline of 2%.
The prominent group of stocks dubbed the “Magnificent Seven” has been integral to the recent decrease in U.S. stock markets. This pullback caused the S&P 500 to experience its first ‘correction’ since 2023, dipping 10% below its historical high. Previous years saw Big Tech stocks surging sharply due to enthusiasm around artificial intelligence technology, although critics claimed their valuation soared more quickly than their already strong profit growth justified.
Nvidia experienced a significant decline of 6%, marking a cumulative loss of 15.5% for the year. It significantly weighed down the S&P 500. Similarly, other AI-focused companies, including Super Micro Computer, a server builder, saw a decline of 8.9%, impacting those involved in powering AI data centers.
Tesla faced further challenges, with concerns that political disapproval toward its CEO, Elon Musk, could affect the company’s sales. The electric vehicle manufacturer saw its stock drop by 5.6%, contributing to a 32.6% loss for 2025.
Other U.S. automakers experienced turbulent trading after reports that President Donald Trump planned to announce tariffs on auto imports following the market’s closure on that day. In response, General Motors fell by 3.1%, while Ford Motor experienced fluctuations throughout the day, ultimately rising slightly by 0.1%.
Recently, the U.S. stock market had shown signs of stabilizing after entering a corrective phase, enjoying a three-day winning streak by Tuesday. However, Wall Street strategists cautioned that volatility could persist, especially with a new series of U.S. tariffs expected soon. Despite potential mitigations against global economic impacts, the mere discussions of tariffs have already dented confidence among U.S. consumers and businesses.
This diminishing confidence, combined with tariff threats, led strategists like Venu Krishna from Barclays to reduce their year-end forecast for the S&P 500 to 5,900 from 6,600, implying a 2% increase from Tuesday’s close over a previously anticipated 14% rise. Their prediction for S&P 500 company profits this year was also cut, despite not anticipating a recession.
Much uncertainty remains, with future market movements dependent on the scope and severity of tariffs, as noted by Krishna and others in a report. Should there be a reduction or cancellation of tariffs, the S&P 500 could potentially rise to 6,700, whereas stricter tariffs could see it fall to 4,400.
Despite consumer and business unease, the overall economy and job markets appear steady, though economists are vigilant for indications of confidence-related economic damages. A report on Wednesday provided little direction; orders for durable goods like machinery and airplanes increased unexpectedly, while a measure indicative of business investment turned from growth to contraction. This could hint that businesses are delaying expenditure pending clarity on tariffs.
In the bond market, Treasury yields, which can reflect perceptions of U.S. economic health, fluctuated, with the yield on the 10-year Treasury finishing higher at 4.34%, up from 4.31% on Tuesday.
On Wall Street, GameStop surged 11.7%, beating quarterly expectations and announcing plans to channel some of its treasury into bitcoin investments. Dollar Tree climbed 3.1% after revealing a sale of Family Dollar to private equity firms for $1 billion, following years of trying to integrate the chain. Plus, better-than-expected quarterly profits boosted its share performance.
Cintas also saw a significant increase of 5.8% after reporting stronger-than-expected profits. Overall, the S&P 500 decreased by 64.45 points to end at 5,712.20. The Dow Jones Industrial Average concluded down 132.71 at 42,454.79, while the Nasdaq Composite fell 372.84 to 17,889.01.
Internationally, stock market indices showed a mixed performance across Europe and Asia, with the FTSE 100 in London gaining 0.3%, buoyed by improved UK inflation figures exceeding economist predictions.