In midday trading on Thursday, US equity indexes experienced a significant decline while the majority of government bond yields saw an uptick, reflecting investor apprehension in the light of recent labor market data and a shifting landscape regarding tariffs. The Nasdaq Composite recorded a substantial drop of 2.4%, settling at 18,103.1.
The S&P 500 followed suit with a decrease of 1.9%, bringing its value down to 5,733.4, and the Dow Jones Industrial Average fell 1.2%, landing at 42,490.3. Notably, sectors such as real estate, consumer discretionary, and technology emerged as the most severe decliners, contributing to an overall downturn across the market this trading session. Reports indicate that former President Trump is contemplating a deferral of his proposed 25% tariffs on Canada and Mexico.
This decision pertains to a range of goods and services that fall under a trade agreement known as the United States-Mexico-Canada Agreement (USMCA). Commerce Secretary Howard Lutnick was quoted in a Bloomberg news report on Thursday, suggesting that a decision would be forthcoming regarding a one-month exemption from tariffs imposed earlier this month.
"It seems likely that this exemption will encompass all goods and services that comply with USMCA standards," he remarked during an interview with CNBC. This proposed exemption would be effective until April 2, at which point Trump is expected to introduce a new wave of tariffs that may include reciprocal duties aimed at various countries worldwide and specific duties targeting sectors such as automotive, pharmaceuticals, and semiconductor imports. Additionally, the CBOE's volatility index (VIX), which is commonly referred to as the 'fear gauge,' displayed a notable increase of 6.3%, clambering up to 23.25 during the session. In terms of economic indicators, layoffs within the United States hit a considerable high, with plans reaching 172,017 jobs in February, marking the most significant monthly total since July 2020.
This surge has been largely attributed to reductions in the government sector, as reported by outplacement firm Challenger, Gray & Christmas. On a more positive note, initial jobless claims in the US saw a decline, falling to 221,000 for the week ending March 1, compared to 242,000 the previous week.
Analysts had anticipated a reduction to 233,000 based on a survey conducted by Bloomberg. Overall, most US Treasury yields moved higher during the day, with the 10-year yield climbing by 5.4 basis points, reaching 4.32% in intraday trading. The volatility in the markets, alongside the evolving economic landscape, continues to keep investors on edge as they evaluate the implications for their portfolios and future investment strategies..