Wall Street experienced continued volatility as traders grappled with fluctuating tariff headlines. Despite a brief recovery, stocks ultimately succumbed to selling pressure, highlighting the market’s sensitivity to trade tensions.
The S&P 500 declined 1.8%, while the Nasdaq 100 fell 2.8%, nearing a technical correction. Even President Trump’s decision to postpone levies on certain Mexican and Canadian goods under the North American trade agreement failed to provide sustained relief. This fragility underscores the market’s deep-seated anxieties regarding the ongoing trade dispute. Meanwhile, the dollar experienced its longest losing streak since September, as the peso and loonie appreciated. Treasury trading remained relatively stable.
This latest development in the trade war follows the US announcement of its most significant tariff increase in decades. President Trump’s justification for these measures centers on the assertion that foreign nations are exploiting the US, and that tariffs will bolster the country’s economic standing. When questioned about the market’s negative reaction, he attributed the decline to “globalists” who disapprove of America’s growing prosperity.
“Volatility appears to be the only constant as policies are enacted, challenged, adjusted, and often re-implemented,” observed Chris Low of FHN Financial. This sentiment encapsulates the prevailing uncertainty in the current market environment.
Tech sector weakness significantly contributed to the overall market downturn, with Nvidia Corp. leading the decline among megacaps. However, Broadcom Inc.’s positive revenue forecast in after-hours trading offered some reassurance, suggesting continued investment in artificial intelligence computing. Conversely, Hewlett Packard Enterprise Co. issued a disappointing profit outlook and announced plans for approximately 3,000 job cuts.
On the eve of the US jobs report, data revealed a decrease in jobless claims, providing a glimmer of hope following recent indicators of a weakening labor market. The upcoming employment report is anticipated to show an increase in job growth.
Treasury Secretary Scott Bessent dismissed concerns that tariff increases would trigger a surge in inflation. Federal Reserve Governor Christopher Waller echoed this view, stating that the impact on prices from tariffs is unlikely to be substantial. While Waller wouldn’t endorse a rate cut in March, he anticipates the possibility of two, perhaps three, rate reductions this year.
The S&P 500 remained near its crucial 200-day moving average, a key technical level. The Dow Jones Industrial Average dropped 1%, and a gauge of the Magnificent Seven megacaps plummeted 2.9%. The Russell 2000 also slid 1.6%. These broad market declines reflect the widespread concern about the potential economic consequences of escalating trade tensions.
In conclusion, market volatility persists as the trade war continues to unfold. Investor sentiment remains fragile, with equity markets reacting sharply to each new headline. While some positive economic data and corporate earnings provided temporary respite, the overarching uncertainty surrounding trade policy continues to weigh heavily on market performance. The upcoming employment report and further developments in trade negotiations will likely be crucial in determining the market’s direction in the near term.
