U.S. stocks experienced notable declines after the release of troubling manufacturing data, coupled with looming tariff decisions by the government. On Monday, Wall Street's major indexes faced widespread losses with the Dow Jones Industrial Average falling by 31.77 points, or 0.07%, to 43,809.67. The S&P 500 saw a loss of 22.52 points, or 0.38%, to settle at 5,931.98, and the Nasdaq Composite, which has been particularly sensitive to technology stocks, dropped 145.65 points, or 0.78%, to 18,700.59.
The decline was primarily driven by concerns over U.S. factory orders and apprehensions surrounding forthcoming tariffs. Technology stocks, which have had significant growth recently, were particularly hard hit, with the sector experiencing the steepest downturn of all S&P 500 sectors at 1.5%. A prime contributor to this slump was chip giant Nvidia, which saw its shares fall by 5%.
Additional cyclical sectors, like industrials and energy, also noted declines of 0.1% and 0.5%, respectively, reflecting the broader market worry. The recent reports indicating softening consumer demand added to fears of potential economic slowdown. This anxiety among investors sharpened as market participants prepared for inflationary pressures once the tariff measures proposed by the Trump administration start taking effect.
February proved to be challenging for Wall Street, marking its first monthly decline of 2025. During this period, the Nasdaq neared the brink of a significant correction, approaching a 10% drop from its all-time high, mainly prompted by concerns over rising inflation driven by the impending tariffs.
Adding complexity to the situation, President Trump set Tuesday as the deadline for the end of the one-month pause on the 25% tariffs imposed on imports from Canada and Mexico. Commerce Secretary Howard Lutnick, amid this backdrop, mentioned advancements concerning tariff negotiations, leading to speculation around potentially lower duties than initially threatened. ‘Most of Wall Street still believes the tariffs are rhetoric rather than reality,’ stated Sam Stovall, the chief investment strategist at CFRA Research. He elaborated, ‘The purpose of the tariff by the administration is to make changes with the trading partners, not to end trade with them.’
The Federal Reserve's decision to keep interest rates unchanged since December also weighs on the financial markets as stakeholders remain watchful for economic indicators this week—data powerful enough to influence the Fed’s outlook considerably.
Recent market activities indicate traders have increased their bets concerning monetary policy, projecting at least two cuts of 25 basis points by December, according to data from LSEG. Conversely, the looming possibility of additional tariffs, particularly on imports from China, sheds light on the geopolitical tensions. If enacted, this would likely provoke retaliatory measures from Beijing focusing on U.S. agricultural imports.
Shares of Chinese companies listed on U.S. exchanges faced declines, with Nio and JD.com experiencing losses of around 4.7% and 2.6%, respectively, as investor concerns mounted over the potential impacts of Chinese retaliation.
Interestingly, Tesla defied the trends with its stock rising by 0.7% following Morgan Stanley's reinstatement of the brand as their 'top pick' within the U.S. automotive sector. Also notable were gains among cryptocurrency-related stocks, with MicroStrategy witnessing a 4% surge and Coinbase's shares increasing by 2.5% after Trump hinted at creating reserves for digital assets.
Intel also marked positive performance, climbing 2% attributable to collaborative manufacturing tests with Nvidia and Broadcom, showing some underlying strength within operating frameworks.
Across the NYSE, the number of advancing issues outpaced decliners at a 1.49-to-1 ratio; contrastingly, on the Nasdaq, declining issues prevailed with the nominal ratio being 1.24-to-1. While the S&P 500 showcased 54 new 52-week highs, it simultaneously recorded five new lows. The Nasdaq Composite presented 39 new highs juxtaposed with 143 new lows.
The market's unpredictable nature highlights the impact of macroeconomic events and policy changes on sectors ranging from technology to agriculture. It sets the stage for the evolution of investment strategies, as market players seek to navigate the challenges created by shifting economic indicators and external geopolitical pressures.