US markets eliminated all of their post-election gains as stocks deepened their sell-off with fresh tariffs on Canada, Mexico, and China now officially in effect.
The Dow Jones Industrial Average (^DJI) fell about 1.5%, while the benchmark S&P 500 (^GSPC) dropped 1.6%. The Nasdaq Composite (^IXIC) also shed around 1.5%, as all three indexes took another big leg lower.
Notably, the Nasdaq is set to close down at least 10% from its record closing high on Dec. 16, which would mark correction territory for the tech-heavy index.
Rising fears of a full-on trade war drove Monday’s sell-off after the president said there was “no room left” for Canada or Mexico to strike a deal to mitigate promised tariffs.
Stocks are retreating as markets assess the likely impact of Trump’s broad tariffs on America’s top trading partners. The measures — fresh 25% tariffs on Canada and Mexico, and a doubling in China duties to 20% — were signed into effect at midnight ET on Tuesday.
Canada hit back with a sweeping package of immediate tariffs on US imports, while China retaliated with additional 15% duties on US farm products such as chicken and pork, to come on March 10. Many saw Beijing’s response as less aggressive than feared, leaving room for negotiation with Trump.
Target (TGT) warned that tariffs will put pressure on first quarter profit as it delivered an earnings beat before the bell. The retail giant’s stock was little changed in early trading. Meanwhile, its sector peer Best Buy (BBY) put out a muted annual sales forecast alongside its own quarterly beat. The additional sign of consumer caution helped send its shares lower.
As stocks sell-off, investors are flocking to the bond market.
US Treasury yields are now trading at levels not seen since late last year as investors worry Trump’s tariffs will hurt economic expansion and the labor market, potentially prompting the Federal Reserve to lower the cost of borrowing even as risks of higher prices remain tilted to the upside.
The 10-year yield (^TNX) has sunk over 63 basis points from its January high to trade at just around 4.15%.
But as Citi analyst Stuart Kaiser put it in a new note on Monday, “Rates are lower for the ‘wrong’ reasons.”
Recent data has highlighted these growth concerns, marking the return of “bad news for the economy is bad news for stocks.” On Monday, ISM Manufacturing prices paid came in at their highest since June 2022 while new orders fell into contraction, suggesting a “stagflationary” environment in which growth slows but price increases remain elevated.
Meanwhile, confidence plummeted in February, notching its biggest monthly decline in nearly four years as 12-month inflation expectations jumped and recession fears escalated. The latest consumer sentiment reading also highlighted greater concerns around tariffs and the impact those and other policies could have on inflation and the broader economy.
Traders now expect three rate cuts from the Federal Reserve this year, according to the CME FedWatch Tool.
As weaker-than-expected data has spurred concerns about US economic growth, markets have moved to price in more easing from the Federal Reserve this year.
On Tuesday, traders were betting on three interest-rate cuts from the Fed in 2025, for the first time this year. Debate around when the Fed’s next rate cut will come has intensified too. Markets now see a 50/50 chance the Fed lowers rates at its May meeting, per the CME FedWatch Tool. Just a week ago, they were pricing in a 75% chance the Fed would hold rates steady that month.
But stocks have slumped amid a shifting Fed narrative, and the S&P 500 (^GSPC) is now at its lowest level since before Donald Trump won the presidential election in November.
While rate cuts could bring benefits like lower borrowing costs for corporates, Citi equity strategist Drew Pettit sounded a note of caution. He told Yahoo Finance that if soft economic data drives the Fed to ease monetary policy, markets won’t welcome the news as they have in the past.
“‘Fed cuts because of weak economic data’ is not a good thing for markets anymore,” Pettit said. “If we were talking about this two months ago, you know ‘Fed cuts against a resilient backdrop’ was good for markets.”
US markets have eliminated all their post-election gains as stocks deepen their sell-off with fresh tariffs on Canada, Mexico, and China now officially in effect.
The benchmark S&P 500 (^GSPC) index is now down 1% since Election Day. Notably, it has erased about $3.3 trillion in market cap since Feb. 19.
The Nasdaq 100 (NQ=F) has fallen over 4% over that same time period, while the broader tech index (^IXIC) is down about 1.5%. The blue-chip Dow (^DJI) has dropped nearly 1% since Nov. 5.
Only a few months ago, stocks traded at consistent records as Donald Trump’s presidential win fueled bullish Wall Street euphoria on hopes of pro-business policies and lower taxes.
Flash forward to today, and that euphoria has all but evaporated as Trump’s tariffs spark growth fears while inflation remains stubbornly elevated.
“Many of the key trends in financial markets in the run-up to and immediate aftermath of the US election last November have stalled or partly reversed since President Trump took office last month,” Jonas Goltermann, deputy chief markets economist at Capital Economics, wrote in a note last week.
“Since then, US Treasury yields have dropped back, the 2-10s curve has flattened, US equities have struggled both in absolute terms and relative to those elsewhere, and the dollar has dropped back,” he said. “In other words, the ‘Trump trade’ narrative that dominated many markets in Q4 is floundering.”
US stocks continued their sell-off on Tuesday as fresh tariffs on Canada, Mexico, and China officially went into effect at midnight.
The Dow Jones Industrial Average (^DJI) fell about 0.7%, while the benchmark S&P 500 (^GSPC) dropped 0.8%. The tech-heavy Nasdaq Composite (^IXIC) shed around 0.9%, as all three indexes took a leg lower.
US Treasury Secretary Scott Bessent argued that a market sell-off in response to new tariffs would be temporary, Bloomberg reports, though he acknowledged there may be a transition period as new duties on Canada, Mexico, and China take effect.
The Treasury Secretary’s comments come after stocks plummeted Monday in response to the tariffs. On Tuesday morning, futures for Dow Jones Industrial Average futures (YM=F) fell 0.3%, while S&P 500 futures (ES=F) dropped 0.8%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) shed nearly 1%.
Bloomberg reports:
US Treasury Secretary Scott Bessent projected confidence in President Donald Trump’s expansive plans to tariff foreign nations even as the stock market slumped in reaction to the first round of levies on Canada and Mexico.
“Over the medium term, which is what we’re focused on, it’s a focus on Main Street. Wall Street’s done great, Wall Street can continue to do fine, but we have a focus on small business and consumers,” Bessent said on Fox News’s Fox & Friends Tuesday. “So we are going to rebalance the economy.”
Read more here.
The risk to global growth from Trump’s tariffs is rattling bond investors, who appear increasingly convinced that the president is no longer just making threats as a precursor to a deal.
Traders also ramped up bets on the Federal Reserve making more interest-rate cuts than previously expected.
Bloomberg reports:
The US yield curve steepened in jittery markets as weeks of tariff threats from President Donald Trump came to fruition, fueling concerns about the impact on global growth.
Rates on 30-year Treasuries (^TYX) rose one basis point as of 12:19 p.m. in London, as yields on shorter-maturity securities fell five basis points, following the imposition of levies on Canada, Mexico and China. Traders added to bets on US interest-rate cuts, fully pricing three more quarter-point reductions this year.
Yield curves also steepened in Europe, with rates on two-year German bunds falling five basis points to 2.02%. Traders amped wagers on easing from the European Central Bank on concern that the euro area will be next to face levies, while an aggressive ramp up in EU defense spending pinned the spotlight on growing government deficits.
“We see structurally steeper curves,” said Mohit Kumar, chief economist and strategist for Europe at Jefferies, who favors this trade in the UK and Germany. “Our view remains that tariffs are not an inflation story but a growth story.”
Read more here.
Shares of Okta jumped in premarket trading Tuesday after the identity and cybersecurity company reported solid sales, earnings, and 2025 profit guidance.
All three metrics beat Wall Street analysts’ estimates as the company benefitted from increased corporate spending on cybersecurity protection amid the AI boom.
Okta stock rose 14% Tuesday morning and was a trending ticker on Yahoo Finance.
“This is a blowout quarter,” Okta co-founder and CEO Todd McKinnon told Yahoo Finance’s Brian Sozzi in an Opening Bid podcast exclusive. “It’s reflective of big deals in the quarter,” McKinnon said, pointing to a 25% surge in subscription backlog to more than $4 billion.
Read more here.
Target’s (TGT) earnings just hit the wires.
And while the earnings beat will quickly grab your eyes, it’s more important to lock in on this line from the release given all the risk around tariffs:
“In light of ongoing consumer uncertainty and a small decline in February net sales, combined with tariff uncertainty and the expected timing of certain costs within the fiscal year, the company expects to see meaningful year-over-year profit pressure in its first quarter relative to the remainder of the year,” Target said.
Target declined to share specific first quarter earnings guidance. Yahoo Finance data shows Wall Street analysts were looking for a slight first quarter year-on-year earnings improvement.
Economic data: No notable economic data expected.
Earnings: Target (TGT), Best Buy (BBY), AutoZone (AZO), On Holding (ONON), CrowdStrike (CRWD), Nordstrom (JWN), Ross Stores (ROST)
Here are some of the biggest stories you may have missed overnight and early this morning:
Trump pulls trigger on threatened tariffs that could recoil on US
Canada hits back with sweeping tariffs on $107B of US products
Trump 2.0’s agenda is hitting the economy at a fragile moment
China puts extra tariffs of up to 15% on major US farm imports
GOP lawmakers turn up the heat on the Fed over dual mandate
Tesla’s EV sales in China fall 49% in February
China leaves door open for talks with measured tariff response
Why tariffs ‘aren’t the problem’ in the stock market: Veteran
China’s tit-for-tat move to Trump was to slap tariffs of up to 15% on US farm goods such as pork and beef, starting next week. That’s going down generally well on Wall Street, which sees the targeted action as designed to avoid escalating a trade war between the world’s top two economies.
Bloomberg reports:
The Chinese response throws the ball back into the US court, with Trump’s review of Beijing’s compliance with the first trade agreement due in April adding to the urgency for negotiation. While Trump signaled a desire to speak with President Xi Jinping early last month, they have yet to have a call since the US leader took office.
“So far, China has given a measured, proportional response as they do not want to further escalate the situation,” said Henry Gao, a law professor at Singapore Management University who researches Chinese trade policies. “Once the April measures are out, that’s when China will likely negotiate with the US.”
The latest trade salvos came a day before Xi heads into the government’s biggest political meeting of this year, where his lieutenants will unveil their economic blueprint for 2025.
“I think the two most important reaction measures are still yet to come: the PBOC’s currency response and the fiscal package to be announced at the National People’s Congress,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics in Hong Kong.
Read more here.
US President Donald Trump’s plan for wide-ranging tariffs against Canada and Mexico has occurred with no further delays.
Yahoo Finance’s Ben Werschkul reports:
A second round of tariffs from Donald Trump starts today with new duties on America’s top three trading partners: Canada, China, and Mexico.
There is “no room left for Canada or for Mexico,” Trump reiterated Monday afternoon at the White House, saying he wouldn’t pare back his tariffs levels on those two countries.
“They’re all set,” he added.
The president is imposing 25% duties on Canadian and Mexican imports following a 30-day pause. He is also implementing a second round of 10% duties on Chinese imports to increase the blanket tariffs on that nation to 20%.
The president signed an action on Monday afternoon with the new duties against China in an order that charged the country “has not taken adequate steps to alleviate the illicit drug crisis.” The duties on Canada and Mexico required no action this week as Trump’s previously signed order — with a March 4 deadline — simply went in into effect.
Read more here.
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In This Article:
Yields plummet as market sell-off, growth fears encourage flight to safety
Markets pricing in more Fed rate cuts ‘is not a good thing’ for markets
The ‘Trump bump’ is gone as markets wipe out post-election gains
US stocks slide at the open
Treasury Secretary Bessent shrugs off tariff sell-off, says Wall Street isn’t the focus
US yield curve gets steeper as tariffs put growth at risk
Okta stock jumps on ‘blowout quarter’
Ignore the Target earnings beat
Good morning. Here’s what’s happening today.
Xi leaves door open for talks with Trump
President Donald Trump’s tariffs take effect
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NEW YORK (AP) — U.S. stocks tumbled Monday and wiped out even more of their gains since President Donald Trump’s election in November, after he said that tariffs announced earlier on Canada and Mexico would take effect within hours.
The S&P 500 dropped 1.8 after Trump said there was “no room left” for negotiations that could lower the tariffs set to begin Tuesday for imports from Canada and Mexico. Trump had already delayed the tariffs once before to allow more time for talks.
READ MORE: Trump administration to impose tariffs on Mexico and Canada beginning March 4, will also double 10 percent tariffs on China
Trump’s announcement dashed hopes on Wall Street that he would choose a less painful path for global trade, and it followed the latest warning signal on the U.S. economy’s strength. Monday’s loss shaved the S&P 500’s gain since Election Day down to just over 1 percent from a peak of more than 6. That rally had been built largely on hopes for policies from Trump that would strengthen the U.S. economy and businesses.
The Dow Jones Industrial Average dropped 649 points, or 1.5 percent, and the Nasdaq composite slumped 2.6 percent.
Monday’s slide punctuated a rocky couple of weeks for Wall Street. After the S&P 500 set a record last month following a parade of fatter-than-expected profit reports from big U.S. companies, the market began diving following weaker-than-expected reports on the U.S. economy, including a couple showing U.S. households are getting much more pessimistic about inflation because of the threat of tariffs.
READ MORE: Mexico makes case to avoid Trump’s threatened tariffs
The latest such report arrived Monday on U.S. manufacturing. Overall activity is still growing, but not by quite as much as economists had forecast. Perhaps more discouragingly, manufacturers are seeing a contraction in new orders. Prices, meanwhile, rose amid discussions about who will pay for Trump’s tariffs.
“Demand eased, production stabilized, and destaffing continued as panelists’ companies experience the first operational shock of the new administration’s tariff policy,” said Timothy Fiore, chair of the Institute for Supply Management’s manufacturing business survey committee.
The hope on Wall Street had been that Trump was using the threat of tariffs as a tool for negotiations and that he would ultimately go through with potentially less damaging policies for the global economy and trade. But Trump’s going forward with the Mexican and Canadian tariffs hit a market that wasn’t certain about what would happen next.
The market’s recent slump has hit Nvidia and some other formerly high-flying areas of the market particularly hard. They fell even more Monday, with Nvidia down 8.8 percent and Elon Musk’s Tesla down 2.8 percent.
WATCH: A look inside Canada’s last-minute efforts to avert Trump’s steep tariffs
Elsewhere on Wall Street, Kroger fell 3 percent after the grocery chain’s Chairman and CEO Rodney McMullen resigned following an internal investigation into his personal conduct.
Wall Street’s blue Monday even pulled down stocks of companies enmeshed in the cryptocurrency economy, which had risen strongly in the morning. They initially bounced after Trump said over the weekend that his administration was moving forward with a crypto strategic reserve.
But MicroStrategy, the company that’s now known as Strategy and has been raising money to buy bitcoin, slid to a loss of 1.8 percent. Coinbase, the crypto trading platform, fell 4.6 percent.
All told, the S&P 500 fell 104.78 points to 5,849.72. The Dow Jones Industrial Average dropped 649.67 to 43,191.24, and the Nasdaq composite slumped 497.09 to 18,350.19.
Across the Pacific in China, manufacturers reported an uptick in orders in February as importers rushed to beat higher U.S. tariffs and a Chinese state media report said that Beijing was considering ways to retaliate.
Trump had imposed a tariff of 10 percent on imports from China, and that’s scheduled to rise to 20 percent beginning Tuesday. He also ended the “de minimis” loophole that exempted imports worth less than $800 from tariffs.
In Hong Kong, Chinese bubble tea chain Mixue Bingcheng’s stock soared 43 percent following its $444 million debut on the market. The company claims to be the world’s largest food retail chain, with more than 45,000 outlets, and its jump came as the Hang Seng index rose 0.3 percent.
Indexes rose by even more across Europe and in Tokyo. European markets leaped after a report showed an easing of inflation in February. That should help the European Central Bank, which investors widely expect will deliver another cut to interest rates later this week.
Germany’s DAX surged 2.6 percent, and France’s CAC 40 jumped 1.1 percent. Stocks outside the United States have performed better than the S&P 500 this year, even with Trump’s promises for “America First” policies
In the bond market, the yield on the 10-year Treasury fell to 4.16 percent from 4.24 percent just before the manufacturing report’s release. It’s come down sharply since January, when it was approaching 4.80 percent, as worries have built about the possibility of a slowing U.S. economy.
Often, drops in Treasury yields can give a boost to stock prices because they make loans cheaper to get and give a boost to the economy. But the reason for this recent drop in yields, softer economic growth expectations, may mean that’s not the case this time, according to Morgan Stanley strategists led by Michael Wilson.
Typically, the Federal Reserve would cut interest rates if the economy needs help. But when inflation is high, or at least worries about it are, the Fed has less leeway to ease rates.
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Left: Monday’s slide punctuated a rocky couple of weeks for Wall Street. File photo by Spencer Platt/ Getty Images
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