Market Overview

The U.S. stock market continued its downward trajectory on Tuesday, as uncertainty surrounding President Donald Trump’s trade policies intensified. Following a significant announcement regarding increased tariffs on steel and aluminum imports from Canada, the S&P 500 fell by 0.6% in afternoon trading, nearing a critical threshold of a 10% correction from its recent record highs.

Impact of Tariff Increases

Trump’s declaration to double planned tariff increases on Canadian imports, which he cited as a response to actions taken by a Canadian province, played a pivotal role in the market’s decline. Specifically, the Dow Jones Industrial Average saw a drop of 462 points, equivalent to 1.1%, as of 2:10 p.m. ET. While the Nasdaq composite experienced minimal fluctuations, the overall market was under pressure from widespread losses across various sectors.

Market Volatility

Recent trading activities have reflected heightened volatility, with the S&P 500 exhibiting swings greater than 1% on seven occasions within the past eight days. Investors are left grappling with the potential economic ramifications of Trump’s tariff policies. Press Secretary Karoline Leavitt addressed concerns about the economic impact, reiterating that the president is focused on balancing interests between Wall Street and Main Street.

Corporate Responses and Economic Effects

Major companies, particularly in the airline industry, are already feeling the repercussions of these tariff uncertainties. Delta Air Lines reported a marked decline in customer confidence, leading to a significant reduction in its revenue growth forecast for the early months of 2025. Specifically, Delta has adjusted its expectations down from a range of 7% to 9% growth to just 3% to 4%.

Southwest Airlines also lowered its revenue outlook due to various external factors, including a downturn in government travel and ongoing challenges presented by wildfires in California.

Stock Highlights

Despite the overall market decline, certain tech stocks managed to mitigate some of the losses. Notably, Tesla’s shares increased by 4.8% following Trump’s social media endorsement of the company. Meanwhile, other tech giant Nvidia experienced a 2.9% gain, although it still faced an 18% year-to-date loss due to the overall market sell-off.

Global Context and Economic Indicators

International stock markets reflected similar trends, with significant declines noted across much of Europe and Asia, despite some stability in Chinese markets post-national congress. Additionally, U.S. Treasury yields remained stable amid ongoing economic concerns, with the yield on the 10-year Treasury rising slightly.

A report released highlighted that U.S. employers advertised approximately 7.7 million job openings at the end of January, indicating that while confidence is shaky, the job market remains relatively solid.