Wall Street is experiencing significant declines as escalating trade tensions between the US and its primary trading partners have erased all gains on the S&P 500 since Donald Trump’s presidency began. At the start of trading, the S&P/ASX 200 index in Australia reflected these losses, dropping by 0.2 per cent to 8179.70. The situation intensified as the Trump administration imposed tariffs on imports from Canada and Mexico, while raising tariffs on China, provoking retaliatory measures from these nations and raising fears of a global economic slowdown.
The S&P 500 index fell by 1.2 per cent, with over 80 per cent of its constituents recording losses. The Dow Jones Industrial Average suffered a 1.6 per cent slide, while the Nasdaq composite fell 0.4 per cent, despite some recovery thanks to gains from major tech companies like Nvidia and Microsoft.
Financial stocks were particularly hard-hit, contributing to the S&P 500’s decline, with JPMorgan Chase and Bank of America seeing significant drops of 4 per cent and 6.3 per cent, respectively. The ripple effects were felt across Europe, where Germany’s DAX dropped by 3.5 per cent due to sharp losses in the automotive sector. Asian markets also experienced more moderate declines.
Investment analysts point out the challenge in projecting the trajectory of the trade war, indicating it has escalated beyond previous levels seen during Trump’s first term. Additional uncertainty looms as President Trump is expected to address Congress shortly, and the Commerce Secretary indicated the possibility of a compromise on tariffs involving Canada and Mexico.
The recent plummet in US stocks marks the end of a rally, which was largely built on expectations for pro-business policies, and has reignited fears over consumer price hikes and inflation pressures. Retailers like Target reported significant profit pressures due to tariffs, leading to a 3 per cent drop in their stock, despite an earnings beat. Best Buy experienced a steep 13.3 per cent decline after issuing a disappointing earnings forecast and highlighting tariff implications on pricing.
Consumer spending—an essential driver of the US economy—has begun to slow as households grow more concerned about inflation. The Federal Reserve, which has previously indicated a willingness to further cut interest rates, is taking a more cautious stance due to tariff-related uncertainties.
In the bond market, Treasury yields showed mixed results, with the yield on the 10-year note increasing slightly to 4.20%, reflecting anxieties about inflation’s potential resurgence due to tariffs. Overall, the S&P 500 fell by 71.57 points, the Dow dropped 670 points, and the Nasdaq lost 65.03 points, signalling a challenging outlook for markets amid these economic pressures.