NEW YORK: The Dow and the benchmark S&P 500 fell in choppy trading on Tuesday after US President Donald Trump announced fresh tariffs on Canada, adding to investor unease that his trade policies could trigger an economic slowdown.
Trump doubled his planned tariffs on all imports of steel and aluminum products from Canada to 50%, in response to the province of Ontario’s decision to place a 25% tariff on its electricity exports to the United States.
He also threatened to “substantially increase” tariffs on cars coming into the US on April 2. Ford and General Motors, that have vast supply chains across North America, fell around 3% each.
Global markets have been roiled ever since Trump sparked back-and-forth tariff moves against major trading partners such as Canada, Mexico and China. Analysts have warned that the escalating trade tension could fan inflationary pressures and potentially stall economic growth.
On Monday, the S&P 500 recorded its most significant one-day drop since December 18, wiping out a staggering $4 trillion from its recent peak. Meanwhile, the tech-heavy Nasdaq confirmed a 10% correction late last week.
“Every time we feel like we’re getting a little bit of a lift, we get a Trump update on more tariffs,” said Dennis Dick, a trader at Triple D Trading.
“International investors looking at all the political uncertainty in the North American markets are saying let’s invest elsewhere.”
At 11:46 a.m. ET the Dow Jones Industrial Average fell 356.14 points, or 0.85%, to 41,555.57, the S&P 500 lost 21.02 points, or 0.37%, to 5,593.54 and the Nasdaq Composite gained 31.77 points, or 0.18%, to 17,500.09.
Nine of the 11 S&P 500 subsectors fell, led by a 0.8% drop in industrials. The S&P 500 equally weighted index lost 1%.
Tariff uncertainty has also weighed on consumer sentiment, with company executives increasingly flagging the impact it can have on upcoming earnings.
Kohl’s forecast a bigger-than-expected drop in annual comparable sales, sending the retailer’s shares down 23%.
Dick’s Sporting Goods declined 5.9% after the retailer forecast downbeat annual results.
Delta Air Lines slid 7% after the carrier slashed its first-quarter profit estimates by half.
American Airlines also dropped 4.8% after the carrier forecast a bigger-than-expected first-quarter loss, sending the broader Dow transportation index down by 2.5%.
“(Tariff uncertainty) is creating a degree of paralysis across the system,” said David Russell, global head of market strategy at TradeStation.
Trump will meet the chief executives of America’s biggest companies later in the day.
Meanwhile, a US Labor Department report showed job openings increased in January. A closely watched inflation report is expected later in the week.
The S&P 500 posted four new 52-week highs and 14 new lows, while the Nasdaq Composite recorded 15 new highs and 267 new lows.
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