In a significant downturn, US equity indexes experienced a steep decline during midday trading on Tuesday, continuing the intense sell-off from the previous session following President Donald Trump’s announcement of plans to double punitive trade tariffs on Canadian steel and aluminum imports. The markets responded negatively, with the Nasdaq Composite decreasing by 0.6% to 17,364.8, the S&P 500 falling 1.1% to 5,555.4, and the Dow Jones Industrial Average plummeting 1.5% to 41,303.3.
Every sector witnessed decline, notably industrials and real estate, marking them as the hardest-hit areas. This unfortunate trend follows a concerning drop from the prior day with the Nasdaq sinking 4%, the S&P 500 losing 2.7%, and the Dow retracting by 2.1% on worries that the US economy may be veering towards a recession due to heightened trade barriers imposed by the Trump administration. Trump's decision to raise tariffs up to 50% on steel and aluminum imports from Canada will take effect on Wednesday.
This measure comes in direct response to Ontario Premier Doug Ford's recent move to implement a 25% surcharge on all electricity shipped from Ontario to the US. Trump expressed, "This will go into effect tomorrow morning, March 12. Additionally, Canada must immediately drop their anti-American farmer tariff ranging from 250% to 390% on a variety of US dairy products, which has long been considered outrageous." He warned that should Canada continue with its current tariffs, he would dramatically increase tariffs on cars imported from Canada. The US dollar showed signs of weakness, depreciating against several major currencies, including a noticeable 0.9% drop against the euro, bringing the exchange rate to 0.91.
Amid these developments, gold futures saw an increase of 0.9%, now priced at $2,924.00, while silver futures surged 2% to $33.20. Nigel Green, chief executive of deVere Group, commented on the situation: "This dollar weakness is not solely attributable to trade tensions — it reflects the broader narrative regarding the US economy under Trump's stewardship.
Investors are starting to factor in the risks associated with a more fragmented global economy, which is compounded by supply chain disruptions and inflationary influences within the US." The CBOE’s volatility index, known as VIX or the fear gauge, spiked by 3.6% to a level of 28.84, marking its highest point in roughly seven months, as market uncertainty grew. In a separate note regarding crude oil prices, the West Texas Intermediate futures slightly increased by 0.4% to $66.30 per barrel, although this fell short of maintaining most of their earlier gain, which had approached 1.5% at one point in the intraday trading. On the economic front, the Bureau of Labor Statistics announced that job openings rose to 7.740 million in January, surpassing the 7.6 million expected based on a Bloomberg-compiled survey, and also exceeding the 7.508 million openings recorded in December. Furthermore, Redbook US same-store sales noted an increase of 5.7% year-on-year for the week ending March 8, although this was a decline from the 6.6% growth reported in the prior week. In the world of corporate news, Southwest Airlines, under the leadership of CEO Bob Jordan, disclosed the end of its fuel price hedging policy, which is expected to eliminate premium payments.
Consequently, shares of Southwest Airlines surged 8.8% intraday, making it the top performer on the S&P 500. Conversely, Verizon Communications faced a challenging outlook as its Chief Revenue Officer Frank Boulben indicated that subscriber growth for the first quarter is likely to remain "probably soft." This announcement resulted in shares plummeting 8% intraday, making Verizon the worst performer on the Dow..