On Thursday, the New York stock market reversed course. It fell sharply just one day after rebounding following U.S. President Donald Trump’s decision to delay automobile tariffs from Mexico and Canada for a month.
Investor sentiment was weighed down by anxiety over Trump’s tariff policies.
The Nasdaq, heavily weighted toward tech stocks, dropped more than 10% from its previous peak, officially entering correction territory.
All seven major tech companies declined, with Nvidia and Tesla dropping over 5.6%.
Entering Correction Territory
The Nasdaq officially entered correction territory on this day.
After plummeting 483.48 points (2.61%), it closed at 18,069.26. Although it barely exceeded the 18,000 mark, entering correction territory raised concerns.
The Nasdaq has fallen 10.44% from its all-time high of 21,173.89, recorded on December 16, 2024.
The S&P 500, which reflects broader market trends, showed signs of instability, falling 104.11 points (1.78%) to close at 5,738.52.
The S&P 500 barely held its long-term trend line, the 200-day moving average, at 5,730.76. It dropped as low as 5,711.64 during trading, momentarily breaking below that line.
Entering correction territory and breaking below the 200-day moving average are technical signals of the loss of short-term upward momentum.
The Dow Jones Industrial Average, composed of 30 large-cap stocks, limited its decline to about 1%. The Dow closed down 427.51 points (0.99%) at 42,579.08.
The Chicago Board Options Exchange (CBOE), the Wall Street “fear index”, surged over 13%, rising 2.94 points (13.41%) to reach 24.87.
Trump to Continue Tariffs
On Thursday, Trump announced that he would delay tariffs on certain products from Mexico and Canada until April 2.
This indicates his intention to apply a “reciprocal tariff” broadly to nearly all imported products, including those from Mexico and Canada.
The U.S. plans to implement these reciprocal tariffs starting April 2.
Reflecting on Trump’s first term, Nomura analysts predict that he will pursue tariffs even if the stock market faces selling pressure.
According to a report from CNBC on Thursday, Nomura senior economist Jeremy Schwartz warned that considering Trump’s first term, he would willingly escalate trade tensions despite stock market weakness and volatility.
Schwartz advised that while Trump might ease tariff threats if market and economic shocks exceed a certain level, investors should not expect a rapid de-escalation in such cases.
He noted that despite favorable conditions, such as the 2018 midterm elections, the New York stock market experienced its worst year in decades during Trump’s first term, pointing out that the U.S. economy was not even experiencing a recession.
He warned that tariffs during Trump’s second term could cause significant New York stock market drops, even without a recession.
M7 Tech Giants Plunge
All seven major tech companies saw significant declines.
Nvidia dropped $6.73 (5.74%) to $110.57, while Tesla fell $15.65 (5.61%) to $263.45.
Since the beginning of the year, Nvidia has fallen 18%, and Tesla has dropped nearly 35%.
Meta Platforms fell $28.54 (4.35%) to $627.93, and Amazon dropped $7.66 (3.68%) to $200.70.
Microsoft declined by 1%, Alphabet fell by 0.4%, and Apple slipped by 0.2%.
Semiconductors Struggle
Semiconductor stocks faced difficulties.
After market close, Broadcom was set to announce its quarterly results, while Marvell Technology’s performance pressured the AI theme.
Although Marvell’s fourth-quarter results slightly exceeded market expectations, and its forecasts for the current quarter aligned with market projections, its stock price plummeted.
Marvell fell by $17.86 (19.81%) to $72.28.
Broadcom slid $12.13 (6.33%) to $179.45.
However, Broadcom rebounded in after-hours trading, rising $14.24 (7.94%) to $193.69.
The Philadelphia Semiconductor Index dropped 212.95 points (4.53%) to 4,487.85.
