The US equity markets experienced a drop after midday Monday, led by declines in technology stocks, while gold futures surged ahead of the anticipated tariff announcements from the Trump administration. The Nasdaq Composite fell by 1.6%, settling at 18,544.5, while the S&P 500 decreased by 1.1% to reach 5,888.7.
The Dow Jones Industrial Average also saw a decline of 0.9%, closing at 43,462.1. Technology and energy sectors were among the biggest losers, whereas real estate emerged as one of the few gaining sectors during this trading session. March 4 marks a significant date, coinciding with the end of a month-long period given by President Donald Trump to China, Canada, and Mexico, following his announcement of plans to impose punitive import tariffs on these nations, which are the US's three largest trading partners.
The situation remains dynamic, and the specifics of the tariffs will be determined by Trump, as reported by US Commerce Secretary Howard Lutnick on Sunday. In the commodities market, gold futures experienced a notable increase, rising by 1.8% to $2,899.80, while silver futures rose by 2.5% to $32.28.
This surge in precious metals comes as investors look for refuge amidst upcoming economic uncertainties. The CBOE's volatility index (VIX) experienced a jump of 8% to a level of 21.19 after initially trading lower earlier in the session, indicating a growing apprehension in the markets. In terms of economic indicators, the Institute for Supply Management (ISM) reported that the US manufacturing index fell to 50.3 in February, down from 50.9 in January, failing to meet expectations of 50.8 based on a Bloomberg survey.
ISM Manufacturing Committee Chairman Timothy Fiore stated, "US manufacturing activity expanded marginally for the second month in a row in February after 26 consecutive months of contraction. Demand has weakened, while output has stabilized, and for the first time in several months, inputs contributed positively to the PMI growth." Additionally, construction spending in the US witnessed a decline of 0.2% in January, a figure that diverges from the anticipated decrease of 0.1% outlined in a Bloomberg survey and contradicts January’s reported increase of 0.5%. As investors look ahead, they are eagerly awaiting Friday's nonfarm payrolls data, which will provide further insight into the labor market's condition ahead of the Federal Reserve's monetary policy announcements.
Currently, there is a 93% probability, according to the FedWatch Tool, that the Fed will maintain interest rates at their current levels during the meeting on March 19. On the geopolitical front, developments surrounding the ongoing Russia-Ukraine conflict are expected to remain dominant in investors' discussions this week, especially in light of the recent diplomatic upheaval at the Oval Office on Friday.
The attention will be on how both the European Union and the UK plan to navigate the resolution of this conflict while keeping US interests aligned and considering a minerals deal. In market news, US Treasury yields presented a mixed picture, with the 2-year yield decreasing by one basis point to 3.99%, while the 10-year yield fell by 5.5 basis points to 4.17%. In company-specific news, several news outlets reported that servers linked to a fraud investigation in Singapore may have incorporated Nvidia ($NVDA) chips and were sourced from Dell Technologies ($DELL) and Super Micro Computer ($SMCI) before reaching Malaysia.
This revelation was shared by Singapore's Home Affairs and Law Minister K. Shanmugam. Consequently, shares of Super Micro saw a substantial drop of 8.8%, marking the worst performance on the S&P 500, while Nvidia shares retreated by 7.6%, becoming the steepest decliner on both the Nasdaq and the Dow.
Dell's stock also fell by 5.3%. Additionally, West Texas Intermediate crude oil futures diminished by 2.6%, closing at $67.96 per barrel..