NEW YORK (AP) — In a tumultuous trading session, U.S. stocks experienced significant declines on Monday, following President Donald Trump’s announcement of escalated tariffs.
nvestors continued to exhibit trepidation towards firms perceived as vulnerable in the face of the burgeoning artificial intelligence landscape.
The S&P 500 index plummeted by 1%, a response to Trump’s declaration made over the weekend regarding the imposition of temporary 15% tariffs on a range of nations, an increase from the previously stated 10% effective Friday.
This announcement came in the wake of a Supreme Court ruling that curtailed his authority to implement expansive “reciprocal” tariffs on international imports.
The Dow Jones Industrial Average declined by 821 points, or 1.7%, while the Nasdaq composite index witnessed a drop of 1.1%.
Trump’s swift pivot towards more stringent tariffs underscores the pervasive uncertainty enveloping the global economy, despite the Supreme Court’s recent ruling limiting the president’s tariff powers.
AP AUDIO: US stocks drop after Trump ramps up his tariffs and worries flare about potential AI losers
Tariffs sent stocks lower.
In addition to the temporary 15% tariff, which could remain in place for up to 150 days unless extended by Congress, Trump is exploring other channels to establish more permanent tariffs across various industries.
This has raised apprehensions among trading partners. South Korea’s trade minister, Kim Jung-kwan, indicated on Monday that escalating uncertainty might ensue if the Trump administration perpetuates the imposition of new tariffs through alternative legislation.
However, it is worth noting that Monday’s market maneuvers were considerably less severe than the pandemonium experienced in April, when Trump initially unveiled his “Liberation Day” tariffs. U.S. stocks saw a fleeting uptick during the morning session.
The value of the U.S. dollar slightly declined against foreign currencies. Bitcoin saw a brief dip below $64,000, although it remained above its earlier monthly low. Gold prices ascended, bolstered by their reputation as a secure asset in turbulent times.
Investors appear increasingly aware that the path to clarity regarding the global trade landscape may be lengthy and fraught with further legal challenges.
“Stocks initially benefitted from Friday’s Supreme Court tariff ruling, but it quickly became evident that this decision merely ushered in a new chapter in the ongoing trade saga,” stated Chris Larkin, managing director for trading and investing at E-Trade from Morgan Stanley.
On Wall Street, significant losses were sustained by companies perceived as vulnerable to competition from AI-driven entities. Investors have rapidly and sharply penalized stocks of such companies in recent times.
- CrowdStrike plummeted by 9.8%, compounding its year-to-date losses to 25.3%. The introduction of a new tool by Anthropic, aimed at identifying security vulnerabilities in codebases, has adversely affected stocks across the cybersecurity sector.
- AppLovin dropped by 9.1%, with its year-to-date losses totaling 43.5%. This company, among many in the software domain, is grappling with anxiety that AI competition may siphon off customers and fundamentally alter their market dynamics.
- Firms that have extended credit to software companies facing potential revenue threats also observed declines, with Blue Owl Capital falling by 3.4%, bringing its year-to-date loss to 30.1%.
Anticipation mounts for further significant movements on Wall Street this week, particularly with Nvidia’s profit report scheduled for Wednesday.
Concerns are escalating that companies such as Alphabet and Amazon may be investing heavily in Nvidia’s chips, potentially jeopardizing returns on their investments.
Simultaneously, airline stocks suffered after severe weather conditions, characterized by heavy snowfall and strong winds, resulted in the cancellation of thousands of flights across the congested Northeast. United Airlines plummeted by 5.2%, American Airlines decreased by 4.9%, and Delta Air Lines fell by 3.7%.
In a notable market shift, Novo Nordisk’s shares in the U.S. fell sharply by 16.4% following the disclosure that trials for its CagriSema drug yielded lower weight loss percentages after 84 weeks compared to a similar product from competitor Eli Lilly, whose stock rose by 4.9%.
In summary, the S&P 500 concluded the day down 71.76 points at 6,837.75. The Dow Jones Industrial Average decreased by 821.91 points to settle at 48,804.06, while the Nasdaq composite dipped by 258.80 points, closing at 22,627.27.
Internationally, European stock indices predominantly declined following Friday’s rally, spurred by the Supreme Court ruling.
In Asia, markets reacted to the court’s decision for the first time, with Hong Kong’s Hang Seng climbing by 2.5% and South Korea’s Kospi rising modestly by 0.6%. Markets in Japan and mainland China were closed for holidays.
In the bond market, the yield on the 10-year Treasury dipped to 4.03% from 4.08% late Friday. A high-ranking official at the Federal Reserve commented on Monday that the likelihood of a rate cut at the next meeting in March is tenuous.
Fed Governor Christopher Waller’s remarks indicate a shift from earlier in the year, when he was among the few dissenters against the decision to maintain the key rate after three cuts late last year.
Lower interest rates could provide a much-needed boost to the economy; however, they also risk exacerbating inflationary pressures.
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