Wall Street Drops as Trump’s Tariffs on Mexico and Canada Begin
The U.S. stock market dropped on Tuesday, driven by concerns over the economic impact of tariffs on Mexico and Canada.
The three main indices of Wall Street closed in the red. The Dow Jones Industrial Average fell 1.55% to 42,520.99, the S&P 500 dropped 1.22% to 5,778.15, and the Nasdaq Composite lost 0.35% to 18,285.16.
President Donald Trump followed through on his threat to impose a 25% tariff on products from Canada and Mexico, and increased tariffs on China from 10% to 20%. This caused a setback in the stock market, despite a decline in Treasury yields.
Market participants expect the Federal Reserve to cut rates three times this year to mitigate economic pressures. The first rate cut is anticipated in June, according to CME’s FedWatch tool.
Sector Performance
By sector, the financial sector saw the largest decline (-3.54%), led by major banks: Bank of America (-6.32%), Citi (-6.30%), Wells Fargo (-4.84%), JPMorgan Chase (-3.99%), Goldman Sachs (-4.02%), and Morgan Stanley (-5.75%). The automotive sector also retreated.
The immediate consequence of these tariffs for all involved countries is an increase in inflation. Investors are also keeping an eye on major stocks that could be affected, such as Nvidia (+1.69%).
Main Movers
Target’s stock dropped 2.8% after the retailer provided a cautious outlook for sales growth in its current fiscal year, reflecting uncertainty around U.S. President Donald Trump’s trade policies.
Best Buy fell more than 11%, despite posting a surprise increase in comparable quarterly sales during the key holiday shopping season, as customers took advantage of promotions to purchase high-end appliances and gaming consoles.
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