Following the recent escalation of the trade war by US President Donald Trump, Wall Street is experiencing a significant sell-off. This has resulted in a rapid decline in the US stock market, dropping it by 10% from its recent record high.
In afternoon trading, the S&P 500 saw a 1.4% decrease after Trump announced his decision to increase tariffs on Canadian steel and aluminum. This increase will now be doubled to 50%, with the president citing actions taken by a Canadian province in response to his threats of tariffs on the US as the reason for the escalation.
Oracle dropped five per cent after the technology giant reported profit and revenue for the latest quarter that fell short of analysts’ expectations.
Despite the overall decline, the market’s losses were somewhat mitigated by the performance of several major tech companies. Some of the Big Tech stocks managed to stabilize after facing significant losses in recent months. Notably, Tesla, led by Elon Musk, saw a 1.6% increase after Trump expressed his intention to purchase a Tesla as a gesture of support for Musk and his company.
Tesla’s sales and brand have been under pressure as Musk has led efforts in Washington to cut spending by the federal government. Tesla’s stock is down 44.1 per cent for the young year so far.
Other Big Tech superstars, which had led the market to record after record in recent years, also held a bit firmer. Nvidia added 1.3 per cent to trim its loss for the year so far to 19.3 per cent. It’s struggled as the market’s sell-off has particularly hit stocks seen as getting too expensive in Wall Street’s frenzy around artificial-intelligence technology.
Billions of dollars went in and out of personal bank account
A handful of such superstars was the main reason the S&P 500 set a record as recently as February 19. Just seven of them accounted for more than half of the S&P 500 total’s return last year: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.
Strategists at Citi say they “doubt that the AI bubble is already fully played out” and that such companies could lead the US stock market back to its years-long position of beating other markets around the world. But “that is for the long term, not for the next few months,” the strategists wrote in a report, saying “US exceptionalism is at least pausing.”
In stock markets abroad, which have mostly been beating the United States so far this year, indexes fell across much of Europe and Asia.
Stocks rose 0.4 per cent in Shanghai and were nearly unchanged in Hong Kong as China’s national congress wrapped up its annual session with some measures to help boost the slowing economy.
In the bond market, Treasury yields held a bit steadier after tumbling in recent months on worries about the US economy. The yield on the 10-year Treasury rose to 4.23 per cent from 4.22 per cent late Monday. In January, it was nearing 4.8 per cent.
A report released Tuesday morning showed that US employers were advertising 7.7 million job openings at the end of January, exactly as economists expected. It’s the latest signal that the US job market remains relatively solid overall, for now at least, after the economy closed last year running at a healthy pace.
