The US benchmark equity indexes faced a downturn on Tuesday as Canada and China retaliated against recent trade tariffs imposed by the Trump administration. The Dow Jones Industrial Average dropped by 1.6%, settling at 42,521, while the S&P 500 saw a decline of 1.2%, closing at 5,778.2. The Nasdaq Composite experienced a slight retreat of 0.4%, finishing at 18,285.2.
Excluding the technology sector, which remained relatively stable, all other sectors experienced losses, with financials leading the decline as major banking institutions suffered significant drops. Following the recent announcement by President Donald Trump regarding 25% tariffs on goods imported from Canada and Mexico, these tariffs became effective on Tuesday.
The US government further increased its levy on Chinese imports to 20%. In a reciprocal move, Beijing imposed 15% tariffs on imports of chicken, wheat, corn, and cotton, alongside a 10% levy on select other items. Reports indicated that Canada intends to implement a 25% tariff on CA$30 billion (equivalent to $20.65 billion) worth of US goods immediately, with an additional CA$125 billion in tariffs to follow after three weeks. Trump issued a statement on social media, urging Canadian Prime Minister Justin Trudeau to comprehend that any retaliatory tariffs imposed by Canada would inevitably lead to equivalent increases in US tariffs.
The ramifications of these recent tariff impositions are expected to stir complexities in trade relations with some of America's largest trading partners and potentially lead to supply chain disruptions, as well as heightened price pressures, impacting around $1.5 trillion worth of goods according to an analysis by Stifel. In terms of US Treasury yields, the market displayed mixed results, with the two-year rate remaining mostly unchanged at 3.98%, while the 10-year rate escalated by 6.2 basis points to reach 4.242%.
Turning to specific companies impacted by these economic shifts, Best Buy ($BBY) projected potential price increases in light of uncertainties surrounding tariffs and provided a full-year earnings outlook that notably fell short of Wall Street estimates. Consequently, the electronics retail giant's shares plummeted by 13%, marking them as the worst performer on the S&P 500 for the day. Similarly, Target ($TGT) saw a share decline of 3% following the retailer's announcement that anticipated uncertainties linked to consumer spending and tariffs could adversely affect its profits during the current quarter. In contrast, Nvidia ($NVDA) emerged as a positive performer on the Dow, with shares rising by 1.7% amid the broader downturn.
On another note, Walgreens Boots Alliance ($WBA) is reportedly approaching a deal with private-equity firm Sycamore Partners to transition into a privately held entity for approximately $10 billion. Subsequently, Walgreens' shares climbed by 5.6%, positioning themselves among the top gainers on the S&P 500. Oil prices also witnessed a minor decline, with West Texas Intermediate crude oil dipping 0.4% to $68.09 per barrel.
Conversely, gold experienced a boost, climbing 0.9% to reach $2,927.70 per troy ounce, while silver increased by 0.8%, landing at $32.57 per ounce..