US benchmark equity indexes experienced significant losses following President Donald Trump's confirmation that proposed tariffs on Mexico and Canada will be implemented as scheduled. On Monday, the Nasdaq Composite index plunged 2.6%, closing at 18,350.2, while the S&P 500 dropped 1.8% to 5,849.7. The Dow Jones Industrial Average also faced a setback, losing 1.5% and finishing at 43,191.2.
Among various sectors, technology and energy faced the heaviest declines, whereas real estate emerged as the leading sector among gainers. The stock markets were already witnessing a downward trend during intraday trading, but the situation worsened abruptly when Trump announced that the US would impose 25% tariffs on imports from Mexico and Canada starting Tuesday, as initially planned.
"They're all set. They go into effect tomorrow," Trump is reported to have said. Amidst this backdrop, economic indicators presented a mixed outlook for the US manufacturing sector in February. Data from the Institute for Supply Management indicated a deceleration in the expansion rate, while S&P Global reported the best rate of growth since June 2022.
According to BMO Capital Markets, the ISM survey suggested that inflationary pressures are resurfacing in the production pipeline. "This is not what the (Federal Reserve) wants to see, especially at a time when firms could soon possibly be facing the repercussions of substantial tariffs," the report noted. Policymakers have acknowledged the need for further action to achieve price stability, as inflation rates continue to exceed their target of 2%.
St. Louis Fed President Alberto Musalem commented, "A patient policy approach now will aid us in our pursuit of maximum employment, price stability, and sustainable economic growth." Government bond yields resulted in drops on Monday, with the 10-year yield declining by 6.8 basis points to settle at 4.161%.
The two-year yield also experienced a downturn, falling by 3.5 basis points to 3.96%. In the corporate landscape, Nvidia shares faced an 8.7% decline, marking the steepest drop on the Dow and among the most significant losers on the S&P 500. Reports surfaced indicating that servers involved in a fraud investigation in Singapore possibly contained Nvidia chips.
These chips were supplied by Dell Technologies and Super Micro Computer to local enterprises before reaching Malaysia, as disclosed by Singapore's Home Affairs and Law Minister K. Shanmugam. Consequently, Dell shares plummeted by 7%, and Super Micro's stocks tumbled by 13%, marking it as the worst performer on the S&P 500. Conversely, Verizon was the top performer on the Dow, rising by 1.8%.
Lockheed Martin revealed that it has partnered with Nokia and Verizon to integrate Nokia's 5G technology into its 5G.MIL Hybrid Base Station. This solution aims to merge commercially available 5G with military communication systems, propelling Lockheed Martin's shares to a 1.1% increase on Monday. Recent quarterly results from S&P 500 companies signaled a rebound in growth rates for both earnings and sales in comparison to financials reported earlier, as highlighted by Oppenheimer Asset Management.
Meanwhile, commodity markets reacted with West Texas Intermediate crude oil decreasing by 2% to $68.36 per barrel. Gold prices saw a rise of 1.9%, reaching $2,903.8 per troy ounce, while silver advanced 2.4% to $32.24 per ounce..