Stocks experienced a significant downturn today, erasing earlier gains and closing broadly lower. This market crash was triggered by the White House announcement that President Trump would impose tariffs on key U.S. trading partners, including Canada, Mexico, and China. The Dow Jones Industrial Average fell 0.8%, the S&P 500 dropped 0.5%, and the Nasdaq composite declined 0.3%. This marked the first weekly loss for these indexes in three weeks.
The sudden announcement of tariffs, set to take effect immediately, created substantial uncertainty in the market. Investors reacted negatively to the potential for swift price increases for U.S. consumers and the broader economic impact of escalating trade tensions. Approximately 75% of the stocks in the S&P 500 closed lower, with technology and energy companies experiencing significant declines. The lack of clarity regarding exemptions to the tariffs further fueled investor anxiety.
Adding to the market’s woes, concerns lingered about the artificial-intelligence boom potentially requiring less investment than initially anticipated. Earlier in the week, tech stocks had tumbled globally after a Chinese company, DeepSeek, announced the development of a competitive large language model without relying on high-end chips. This development raised questions about the extent of necessary investments in AI chips, data centers, and electricity infrastructure.
Apple, a bellwether stock and the most valuable company on Wall Street, reversed course from initial gains to a loss of 0.7%. Despite reporting stronger-than-expected profits, the company revealed a dip in iPhone sales, though its services business revenue reached a record high. KLA, a supplier to the electronics industry, also closed down 0.6% despite exceeding profit and revenue expectations.
Nvidia, a prominent player in the AI sector, saw its shares fall 3.7% today and 15.8% for the week. The company’s CEO met with President Trump amidst growing concerns about the potential impact of tariffs on the technology industry and the broader economy. The fear that tariffs could exacerbate inflation contributed to a rise in long-term bond yields, including the 10-year Treasury, which reached 4.54%.
The Federal Reserve’s recent decision to maintain its benchmark interest rate unchanged, while signaling a cautious approach, further underscores the market’s uncertainty regarding the impact of President Trump’s policies. Tariffs and tax cuts could potentially drive inflation higher, while deregulation might have the opposite effect. The interplay of these factors is creating a complex and volatile economic landscape.
Walgreens Boots Alliance experienced a significant drop of 10.3% after suspending its dividend, ending a long-standing streak of quarterly payouts. Exxon Mobil, despite reporting a stronger fourth-quarter profit than anticipated, ticked down 2.5% as its revenue fell short of expectations. These individual stock performances reflect the broader market downturn and the prevailing uncertainty.
International markets also reflected the global impact of the trade tensions, with mixed results in Europe and Asia. Japan’s Nikkei 225 index saw a slight increase following a report indicating that the country’s core inflation surpassed the central bank’s target. However, South Korea’s Kospi index fell 0.8% after resuming trading following holidays. Markets in Hong Kong and Shanghai remained closed for the Lunar New Year.
