Market volatility deepens as Trump escalates tariffs, sending the S&P 500 toward correction territory
On Tuesday, the US stock market continued its decline after US President Donald Trump announced a new escalation in trade tensions.
According to BNN Bloomberg, Wall Street briefly fell 10 percent below its record high set last month. The market remained volatile, continuing the erratic swings that have defined recent weeks.
The S&P 500 dropped 0.8 percent after fluctuating between a small gain and a 1.5 percent loss.
At its lowest point of the day, it had fallen more than 10 percent below its all-time high, nearing what Wall Street refers to as a “correction.”
The Dow Jones Industrial Average lost 478 points, or 1.1 percent, while the Nasdaq composite edged down 0.2 percent.
Investors have faced increased uncertainty as Trump continues to push tariffs and other economic policies.
The ongoing market turbulence reflects concerns over how much economic strain Trump is willing to accept in pursuit of his objectives. His actions and statements, along with those from his administration, have provided little clarity.
Stocks fell sharply in the morning after Trump announced a doubling of planned tariff increases on steel and aluminum imports from Canada. He framed the move as a reaction to a Canadian provincial policy introduced after his tariff threats.
Trump acknowledged that the tariffs could cause economic “disturbance.”
When asked about the potential impact on the stock market, White House press secretary Karoline Leavitt declined to provide a specific response, stating only that “the president will look out for Wall Street and for Main Street.”
On Truth Social, Trump posted: “The only thing that makes sense is for Canada to become our cherished Fifty First State.”
“This would make all Tariffs, and everything else, totally disappear.”
In the same post Trump said he is imposing a 50 percent tariff on Canadian steel and aluminum, citing Ontario’s 25 percent tariff on electricity exports to the US.
Markets briefly pared losses after Ontario’s premier announced the removal of an electricity surcharge that had angered Trump.
He expressed confidence that Trump would also withdraw his proposed 50 percent tariffs on Canadian steel and aluminum. However, stocks resumed their decline by the end of the trading session.
Trump’s shifting tariff policies have fueled economic uncertainty. Higher tariffs can directly impact the economy by raising consumer prices and disrupting global trade.
Even if their effects are less severe than feared, persistent uncertainty may cause businesses and consumers to hold back on spending, slowing economic momentum.
Signs of this impact are emerging in the airline industry.
Delta Air Lines' stock dropped 7.3 percent after the company reported weakening customer confidence, leading to reduced demand for last-minute bookings.
Delta revised its revenue growth forecast for the first quarter of 2025 from 7-9 percent down to 3-4 percent. Southwest Airlines also lowered its revenue projections, citing reduced government travel, California wildfires, and weakening demand.
Despite this, Southwest’s stock gained 8.3 percent after announcing new baggage fees and incentives for loyal customers.
The tech sector also saw mixed results. Oracle shares fell 3.1 percent after reporting lower-than-expected profit and revenue.
However, Big Tech stocks helped limit broader market losses. Tesla rose 3.8 percent following Trump’s statement that he would purchase a Tesla in support of “Elon’s ‘baby.’”
Tesla has struggled this year, with its stock down 42.9 percent amid Musk’s push for federal spending cuts.
Nvidia climbed 1.7 percent, reducing its year-to-date loss to 19 percent, as artificial intelligence-related stocks remain under pressure.
Due to their size, companies like Nvidia and Tesla exert significant influence on the S&P 500 and other major indexes.
By the end of trading, the S&P 500 had dropped 42.49 points to 5,572.07, while the Dow fell 478.23 points to 41,433.48. The Nasdaq composite declined 32.23 points to 17,436.10.
International markets, which have largely outperformed the US this year, also saw declines.
European and Asian indexes fell, though Shanghai gained 0.4 percent and Hong Kong remained flat as China’s annual national congress concluded with new measures to support economic growth.
In the bond market, Treasury yields regained some lost ground. The yield on the 10-year Treasury rose to 4.28 percent from Monday’s 4.22 percent, though it remains well below the 4.80 percent levels seen in January.
US labour market data released Tuesday showed 7.7 million US job openings at the end of January, matching economists’ expectations.
While the US economy ended last year in a strong position, ongoing market uncertainty continues to challenge investor confidence.
