U.S. stocks tumbled on Monday, March 3, 2025, wiping out even more of their gains since President Donald Trump’s election after he confirmed tariffs on imports from Canada and Mexico would take effect imminently. The S&P 500 dropped 1.8% to end at 5,849.72, losing its upward momentum gained since Election Day, which had seen the index peak at over 6%. The recent loss can be primarily attributed to Trump's reiteration of impending tariffs, with the Dow Jones Industrial Average dropping 649.67 points, or 1.5%, to finish at 43,191.24, and the Nasdaq Composite skidding 2.6% to close at 18,350.19.
The tariffs, set at 25%, were originally threatened by Trump but had been delayed previously to allow time for negotiations. Monday's announcement marked the end of hopes for any last-minute deals, as Trump was clear with his declaration, saying, “No room left for Mexico or for Canada.” Alongside Commerce Secretary Howard Lutnick, he outlined the timing of these tariffs, which were confirmed to start on Tuesday, March 4, with the President asserting, “Reciprocal tariffs start on April 2,” making the market react adversely.
The market had entered the day on shaky ground due to soft economic data released earlier too, which suggested weakness within the manufacturing and construction sectors. This led to increased investor pessimism surrounding potential inflation spikes caused by the tariffs. With the economic jitters surrounding Trump's next steps, many investors were clearly uneasy, having witnessed all three major indexes lose more than 1% throughout February. The S&P 500, characterized by its recent upsurge, saw its gain slide down to approximately 0.5% year-to-date.
Underpinning the economic fears was the significant drop across various sectors influenced by these trade policies. High-profile companies reliant on imports faced direct consequences, with General Motors and Ford recording session lows on Monday after Trump’s remarks. The tech sector, often seen as the bellwether of economic health, felt the squeeze as stocks such as Nvidia slumped by more than 8%, dragging the entire Nasdaq down.
Other stocks, particularly those linked to former trends, also fell victim to the sell-off; Broadcom and Super Micro Computer saw their values plummet as uncertainty loomed over tariff repercussions. Small-cap stocks were not spared either, with the Russell 2000 index dropping close to 3%. Economic analysts are left wondering how the market can proceed under such strain. Chris Rupkey, chief economist at FWDBONDS, noted, “Whether the stock market can survive this change remains to be seen,” stressing the need for market resilience.
Investment decisions on Wall Street remained perilous, especially considering the impending February jobs report expected to be released on March 7, which could either mitigate or escalate existing economic anxieties. The ultimatum on trade policy overlapping with underwhelming economic indicators makes for indecisive market behavior. According to Timothy Fiore, chair of the Institute for Supply Management’s manufacturing business survey committee, prices saw rise, underscoring anxieties over who will shoulder the cost of the newfound tariffs.
Despite turbulent days, international markets report varied responses. Stock performances outside the U.S. showed some resilience, with firearms manufacturing businesses across Europe seeing growth spurred by security talks emphasizing increased military spending. The pan-European Stoxx 600 climbed 1.2%, with Germany’s DAX boasting gains of 2.6% as investors reacted positively to these dynamics.
Mixed market sentiments erupted for cryptocurrencies, which enjoyed brief surges, especially as Trump announced plans for a strategic crypto reserve. Bitcoin saw encouraging movement, fluctuated to nearly $94,000 from below $80,000 last week. Amid these swirling sentiments, the overall turnout from Monday’s trading poses considerable questions surrounding the overall economic forecast and market expectations as stakeholders brace for more unclear directives from the Trump administration.
Given the gravity of Trump's tariff proclamations and their timing, analysts anticipate heightened volatility moving forward. The bear market sentiment began to reflect reservations consumer sentiment and purchasing patterns across various sectors, as any ripple effects of these tariffs continue to find their footing within the broader economic ebb and flow. Stakeholders now await the fallout from the Tariffs on Canadian and Mexican goods with anxiety, hoping for effective measures to cushion the projected impacts on both Wall Street and Main Street.