On Tuesday, US markets experienced a volatile trading session as investors grappled with President Donald Trump’s latest tariff threats against Canada. The Dow Jones Industrial Average shed roughly 500 points, or 1.1%, while the S&P 500 fell about 0.8%, trading just under 5,600. The tech-heavy Nasdaq Composite reversed gains in the last few minutes of trading to fall about 0.2%.
Trump’s tariff threats targeted Canadian metals starting on Wednesday. However, he later seemed to concede after Ontario’s premier announced the suspension of an energy tax on neighboring US states. Earlier, Trump threatened to “substantially increase” duties on cars imported into the US from Canada, declaring, “Those cars can easily be made in the USA!
The White House attempted to address fears over a possible US recession as stocks continued their recent declines.
White House press secretary Karoline Leavitt remarked, “The numbers we see today are a snapshot of the moment in time…We are in a period of economic transition.”
Markets react to Trump tariff threats
Investors are now awaiting February’s Consumer Price Index (CPI) report, which is set for release at 8:30 a.m. ET on Wednesday. The report is expected to show moderated price increases.
Headline annual inflation is forecast to be 2.9%, while month-over-month prices are estimated to rise 0.3%, below January’s 0.5% increase. The market sell-off has impacted more than just the ‘Magnificent Seven’ stocks. Highfliers like Netflix, Micron, and Palantir have also experienced significant drops.
Shares of airlines extended declines on Tuesday, with United Airlines lowering its forecast, predicting weaker travel demand amid a recent slowdown in US consumer spending. As uncertainties around tariffs, inflation, and economic growth continue to loom, investors remain cautious, contributing to the ongoing volatility in the stock market. Analysts will watch the upcoming CPI report closely to gauge the future direction of interest rates and broader economic health.
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