Nasdaq Index: Tech Stocks Tumble as Trade War Fears Shake Investor Sentiment

Stocks Slide as Trump’s Tariffs Trigger Global Retaliation

U.S. stocks fell sharply Tuesday after the implementation of new tariffs by the Biden administration led to immediate retaliatory measures from Canada, Mexico, and China. Investors responded by selling off equities, with major indexes extending Monday’s decline.

The Dow Jones Industrial Average dropped 396 points, or 0.9%, while the S&P 500 lost 0.7%. The Nasdaq Composite shed 0.6%, weighed down by losses in technology stocks. Trade-sensitive sectors, including autos and semiconductors, took the brunt of the selling pressure as investors assessed the economic impact of escalating trade tensions.

How Are Global Tariffs Impacting Markets?

The U.S. implemented 25% tariffs on imports from Canada and Mexico, along with an additional 10% duty on Chinese goods. In response, China imposed up to 15% in tariffs on certain U.S. products, while Canadian Prime Minister Justin Trudeau announced a 25% levy on select American goods. Mexico’s government indicated further retaliatory measures would be announced later this week.

Trade-sensitive stocks reacted sharply. General Motors and Ford declined 3% and 2%, respectively, as higher input costs threatened profitability. Chipotle, which sources half of its avocados from Mexico, slipped over 2%.

Clark Geranen, chief market strategist at CalBay Investments, suggested the tariffs might serve as a negotiation tactic rather than the beginning of a prolonged trade war. However, uncertainty led to widespread selling, with traders unwilling to hold risk assets without clarity on how long the tariffs will persist.

Tech Stocks Under Pressure as Nvidia, Tesla Slide

 

Semiconductors and electric vehicle stocks suffered amid concerns about export restrictions. Nvidia fell another 3%, extending Monday’s 9% drop. Traders worry that tariffs and potential curbs on U.S. chip exports to China could limit Nvidia’s access to a key market. The stock is now trading at levels last seen in September.

Tesla dropped 3% in premarket trading after data from the China Passenger Car Association showed a 50% year-over-year decline in sales of Tesla’s Chinese-made vehicles in February. The numbers mark the lowest sales volume in over two years, raising fresh concerns about demand in the world’s largest EV market.

Earnings Surprises and Analyst Calls Move Individual Stocks

While macroeconomic pressures dominated trading, earnings reports and analyst upgrades drove notable stock moves.

Cloud software company Okta jumped 14% after reporting stronger-than-expected quarterly results, with earnings of 78 cents per share on $682 million in revenue. Analysts had expected 74 cents per share on $670 million in sales.

Best Buy edged 1% lower despite exceeding earnings expectations, as concerns over tariffs weighed on the stock. Target, however, gained nearly 1% after reporting better-than-expected results, though management warned of profit pressures in the first quarter of 2025 due to tariffs and consumer uncertainty.

Scotts Miracle-Gro rose over 1% after an upgrade from Stifel, which highlighted a “robust” earnings recovery. In contrast, GitLab dropped 4% after issuing full-year earnings guidance below analyst expectations.

What’s Next for Traders?

Markets are closely watching for further details on Mexico’s response to U.S. tariffs, which could add to volatility in trade-sensitive sectors. Investors will also focus on upcoming economic data and comments from Federal Reserve officials, particularly as inflation concerns resurface.

With stocks under pressure, traders remain cautious as uncertainty over trade policy and corporate earnings continues to shape market sentiment.

More Information in our Economic Calendar.