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Tue, Mar 4, 2025, 2:45 PM 1 min read
In This Article:
US markets eliminated all of their post-election gains as stocks responded to fresh tariffs on Canada, Mexico, and China.
The Dow Jones Industrial Average (^DJI) fell about 0.7%, off of its session lows, while the benchmark S&P 500 (^GSPC) dropped 0.3% after scaling back steeper losses. The Nasdaq Composite (^IXIC) was the lone index in the green, rising 0.6% after also paring losses. It had been heading for correction territory earlier in the session, initially on track to close down at least 10% from its record closing high on Dec. 16.
Rising fears of a full-on trade war drove Monday's sell-off after the president said there was "no room left" for Canada or Mexico to strike a deal to mitigate promised tariffs.
Stocks are retreating as markets assess the likely impact of Trump's broad tariffs on America’s top trading partners. The measures — fresh 25% tariffs on Canada and Mexico, and a doubling in China duties to 20% — were signed into effect at midnight ET on Tuesday.
SNP - Free Realtime Quote USD
As of 3:00:35 PM EST. Market Open.
^GSPC ^DJI ^IXIC
Canada hit back with a sweeping package of immediate tariffs on US imports, while China retaliated with additional 15% duties on US farm products such as chicken and pork, to come on March 10. Many saw Beijing's response as less aggressive than feared, leaving room for negotiation with Trump.
Target (TGT) warned that tariffs will put pressure on first quarter profit as it delivered an earnings beat before the bell. The retail giant's stock was little changed in early trading. Meanwhile, its sector peer Best Buy (BBY) put out a muted annual sales forecast alongside its own quarterly beat. The additional sign of consumer caution helped send its shares lower.
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Here's where gas prices will rise post-Trump tariffs
Yahoo Finance's Ines Ferré reports
Intel drops 7% following TSMC's $100 billion US investment
Intel (INTC) stock sank 6% midday Tuesday, adding to Monday's 4% drop after its Taiwanese rival TSMC (TSM) joined President Trump at the White House to announce a $100 billion investment in its US manufacturing capabilities.
Intel stock had risen as much as 5.5% earlier in the day Monday on a Reuters report that AI chip designers Nvidia and Broadcom are testing its new manufacturing technology but sharply reversed direction following the TSMC announcement.
Intel began making chips for outside customers in 2021, and the storied chipmaker has positioned itself as the American alternative to foreign semiconductor manufacturers — namely TSMC — as the US pushes to bring back domestic chip production and maintain its lead in the emerging AI market. Analysts have widely argued that the US can better achieve its goal by incentivizing TSMC to expand US operations rather than betting on troubled Intel.
Intel shares had experienced a historic rally earlier in February on news that the US government was working on a deal with TSMC to aid the ailing chipmaker. Intel last week pushed back the deadline for its $28 billion Ohio chip factory to come online.
Financials lead sectors lower
It was a sea of red on Tuesday, with all 11 sectors in negative territory as Trump's tariff escalations wreaked havoc on Wall Street.
Financials (XLF) led the way lower, down 3%, followed by Consumer Discretionary (XLY) and Industrials (XLI), which declined 1.5% and 1.4%, respectively.
Within the tech sector, Nvidia shares (NVDA) rose 2% after falling nearly 9% on Monday. Alphabet shares (GOOG, GOOGL) also traded 2% higher while Meta (META) and Tesla (TSLA) continued to slide, down about 3% and 5%, respectively.
Yields plummet as market sell-off, growth fears encourage flight to safety
As stocks sell-off, investors are flocking to the bond market.
US Treasury yields are now trading at levels not seen since late last year as investors worry Trump's tariffs will hurt economic expansion and the labor market, potentially prompting the Federal Reserve to lower the cost of borrowing even as risks of higher prices remain tilted to the upside.
The 10-year yield (^TNX) has sunk over 63 basis points from its January high to trade at just around 4.15%.
But as Citi analyst Stuart Kaiser put it in a new note on Monday, "Rates are lower for the 'wrong' reasons."
Recent data has highlighted these growth concerns, marking the return of "bad news for the economy is bad news for stocks." On Monday, ISM Manufacturing prices paid came in at their highest since June 2022 while new orders fell into contraction, suggesting a "stagflationary" environment in which growth slows but price increases remain elevated.
Meanwhile, confidence plummeted in February, notching its biggest monthly decline in nearly four years as 12-month inflation expectations jumped and recession fears escalated. The latest consumer sentiment reading also highlighted greater concerns around tariffs and the impact those and other policies could have on inflation and the broader economy.
Traders now expect three rate cuts from the Federal Reserve this year, according to the CME FedWatch Tool.
Markets pricing in more Fed rate cuts 'is not a good thing' for markets
As weaker-than-expected data has spurred concerns about US economic growth, markets have moved to price in more easing from the Federal Reserve this year.
On Tuesday, traders were betting on three interest-rate cuts from the Fed in 2025, for the first time this year. Debate around when the Fed's next rate cut will come has intensified too. Markets now see a 50/50 chance the Fed lowers rates at its May meeting, per the CME FedWatch Tool. Just a week ago, they were pricing in a 75% chance the Fed would hold rates steady that month.
But stocks have slumped amid a shifting Fed narrative, and the S&P 500 (^GSPC) is now at its lowest level since before Donald Trump won the presidential election in November.
SNP - Free Realtime Quote USD
As of 3:00:35 PM EST. Market Open.
While rate cuts could bring benefits like lower borrowing costs for corporates, Citi equity strategist Drew Pettit sounded a note of caution. He told Yahoo Finance that if soft economic data drives the Fed to ease monetary policy, markets won't welcome the news as they have in the past.
"'Fed cuts because of weak economic data' is not a good thing for markets anymore," Pettit said. "If we were talking about this two months ago, you know 'Fed cuts against a resilient backdrop' was good for markets."
The 'Trump bump' is gone as markets wipe out post-election gains
US markets have eliminated all their post-election gains as stocks deepen their sell-off with fresh tariffs on Canada, Mexico, and China now officially in effect.
The S&P 500 (^GSPC) has erased about $3.3 trillion in market cap since its record closing high of 6,144.15 on Feb. 19. At that time, the benchmark index's post-election gains had been hovering at just around 6%.
Since the start of 2025, the S&P 500 is down around 2% while the Nasdaq Composite (^IXIC) is off nearly 6% and is currently flirting with correction territory, on track to close 10% off its record high. The blue-chip Dow (^DJI) is trading just barely in the green for the year.
DJI - Free Realtime Quote USD
As of 3:00:36 PM EST. Market Open.
^DJI ^GSPC ^IXIC
Only a few months ago, stocks traded at consistent records as Donald Trump's presidential win fueled bullish Wall Street euphoria on hopes of pro-business policies and lower taxes.
Flash forward to today, and that euphoria has all but evaporated as Trump's tariffs spark growth fears while inflation remains stubbornly elevated.
"Many of the key trends in financial markets in the run-up to and immediate aftermath of the US election last November have stalled or partly reversed since President Trump took office last month," Jonas Goltermann, deputy chief markets economist at Capital Economics, wrote in a note last week.
"Since then, US Treasury yields have dropped back, the 2-10s curve has flattened, US equities have struggled both in absolute terms and relative to those elsewhere, and the dollar has dropped back," he said. "In other words, the 'Trump trade' narrative that dominated many markets in Q4 is floundering."
US stocks slide at the open
US stocks continued their sell-off on Tuesday as fresh tariffs on Canada, Mexico, and China officially went into effect at midnight.
The Dow Jones Industrial Average (^DJI) fell about 0.7%, while the benchmark S&P 500 (^GSPC) dropped 0.8%. The tech-heavy Nasdaq Composite (^IXIC) shed around 0.9%, as all three indexes took a leg lower.
DJI - Free Realtime Quote USD
As of 3:00:36 PM EST. Market Open.
^DJI ^IXIC ^GSPC
Treasury Secretary Bessent shrugs off tariff sell-off, says Wall Street isn’t the focus
US Treasury Secretary Scott Bessent argued that a market sell-off in response to new tariffs would be temporary, Bloomberg reports, though he acknowledged there may be a transition period as new duties on Canada, Mexico, and China take effect.
The Treasury Secretary's comments come after stocks plummeted Monday in response to the tariffs. On Tuesday morning, futures for Dow Jones Industrial Average futures (YM=F) fell 0.3%, while S&P 500 futures (ES=F) dropped 0.8%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) shed nearly 1%.
CME - Delayed Quote USD
As of 2:50:36 PM EST. Market Open.
ES=F NQ=F YM=F
Bloomberg reports:
US yield curve gets steeper as tariffs put growth at risk
The risk to global growth from Trump's tariffs is rattling bond investors, who appear increasingly convinced that the president is no longer just making threats as a precursor to a deal.
Traders also ramped up bets on the Federal Reserve making more interest-rate cuts than previously expected.
Bloomberg reports:
Okta stock jumps on 'blowout quarter'
Shares of Okta jumped in premarket trading Tuesday after the identity and cybersecurity company reported solid sales, earnings, and 2025 profit guidance.
All three metrics beat Wall Street analysts' estimates as the company benefitted from increased corporate spending on cybersecurity protection amid the AI boom.
Okta stock rose 14% Tuesday morning and was a trending ticker on Yahoo Finance.
"This is a blowout quarter," Okta co-founder and CEO Todd McKinnon told Yahoo Finance's Brian Sozzi in an Opening Bid podcast exclusive. "It's reflective of big deals in the quarter," McKinnon said, pointing to a 25% surge in subscription backlog to more than $4 billion.
Ignore the Target earnings beat
Target's (TGT) earnings just hit the wires.
And while the earnings beat will quickly grab your eyes, it's more important to lock in on this line from the release given all the risk around tariffs:
"In light of ongoing consumer uncertainty and a small decline in February net sales, combined with tariff uncertainty and the expected timing of certain costs within the fiscal year, the company expects to see meaningful year-over-year profit pressure in its first quarter relative to the remainder of the year," Target said.
Target declined to share specific first quarter earnings guidance. Yahoo Finance data shows Wall Street analysts were looking for a slight first quarter year-on-year earnings improvement.
Good morning. Here's what's happening today.
Xi leaves door open for talks with Trump
China's tit-for-tat move to Trump was to slap tariffs of up to 15% on US farm goods such as pork and beef, starting next week. That's going down generally well on Wall Street, which sees the targeted action as designed to avoid escalating a trade war between the world's top two economies.
Bloomberg reports:
President Donald Trump's tariffs take effect
US President Donald Trump's plan for wide-ranging tariffs against Canada and Mexico has occurred with no further delays.
Yahoo Finance's Ben Werschkul reports:
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