Nasdaq tumbles over 3% as tariffs spark slowdown fears
NEW YORK (March 10) The tech-heavy Nasdaq led sharp losses among major U.S. stock indexes on Monday, dropping over 3% to a near six-month low, on fears that U.S. President Donald Trump's tariff policies would spark an economic slowdown.
The benchmark S&P 500 (.SPX), has fallen over 8% from its February high. The Nasdaq confirmed a correction last week, having tumbled more than 10% from its December all-time high.
Financial markets have been volatile in recent weeks as rising trade tensions and signs of slowing U.S. economic growth weighed on consumer confidence and business activity. Richly valued U.S. tech stocks have borne the brunt of the recent selloff on Wall Street.
"The Nasdaq has been risk-off all year long ... that's just the unfortunate combination of very high valuations, which is where we started the year, and then increased uncertainty just in general," said Chris Zaccarelli, chief investment officer, Northlight Asset Management.
In an interview on Sunday, Trump declined to predict whether the U.S. could face a recession, at a time when investors are concerned that his fluctuating trade policies on Mexico, Canada and China could dampen consumer demand and corporate investment.
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China's retaliatory tariffs on select U.S. imports are set to take effect on Monday, with U.S. tariffs on certain base metals anticipated later in the week.
The S&P 500 is also poised to close below its 200-day moving average for the first time since November 2023. Analysts view this as a crucial support level, with a break potentially signaling a larger selloff ahead.
The CBOE Volatility Index (.VIX), often dubbed Wall Street's "fear gauge," surged over 3 points to hit 26, marking its highest level since December 18.
A Reuters poll showed 91% of economists see higher recession risks due to Trump's shifting trade policies. HSBC also downgraded U.S. stocks, citing uncertainty around tariffs.
At 12:12 p.m. the Dow Jones Industrial Average (.DJI), fell 480.31 points, or 1.12%, to 42,321.41, the S&P 500 (.SPX), lost 122.83 points, or 2.13%, to 5,647.37, and the Nasdaq Composite (.IXIC), lost 623.75 points, or 3.43%, to 17,572.47.
Heavyweight growth stocks such as Nvidia (NVDA.O), fell 4.4%, while Microsoft (MSFT.O), and Amazon.com (AMZN.O), each declined around 3%.
The technology sector (.SPLRCT), saw a 4% drop, leading the sectoral downturns within the S&P 500. The small-cap Russell 2000 index (.RUT), focused on domestic stocks, dipped 1.6%.
JPMorgan Chase (JPM.N), and Goldman Sachs (GS.N), also retreated, dragging down the broader banks index (.SPXBK), opens new tab.
Defensive stocks, which usually fare better in times of economic uncertainty, such as consumer staples (.SPLRCS), and utilities (.SPLRCU), were marginally higher.
Tesla (TSLA.O), was down nearly 10%, lowest since October 2024, after UBS cut its forecast for the automaker's first-quarter deliveries.
Data on inflation, job openings and consumer confidence are due later in the week.
On Friday, investors took some comfort from Fed Chair Jerome Powell's comments that the economy was on a strong footing, but he also underscored the need for caution on lowering borrowing costs.
The Federal Open Market Committee will convene next week and traders expect policy rates to be left unchanged for the first half of this year, according to data compiled by LSEG.
Crypto stocks such as MicroStrategy (MSTR.O), slid 11.7%, while Coinbase (COIN.O), fell 10.2% tracking lower bitcoin prices.
Declining issues outnumbered advancers for a 1.78-to-1 ratio on the NYSE and a 2.78-to-1 ratio on the Nasdaq.
The S&P 500 posted 24 new 52-week highs and eight new lows, while the Nasdaq Composite recorded 25 new highs and 156 new lows.
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