Nasdaq Index: Volatility Surges as Tesla and Nvidia Lead Market Selloff

Nasdaq Enters Correction as Trade War Fears Weigh on Markets

Wall Street tumbled Tuesday, with the Nasdaq Composite sliding into correction territory as escalating trade tensions spooked investors. The tech-heavy index fell 10% from its December 16 record high, leading declines across major U.S. benchmarks. Concerns over new tariffs imposed by the U.S. and retaliatory measures from key trading partners, including China and Canada, added pressure to the market.

Which Sectors and Stocks Took the Hardest Hit?

Financials led the downturn, with the S&P 500 financial sector dropping 3%. Wall Street giants Citigroup and JPMorgan fell 7.2% and 3.9%, respectively, dragging the KBW Bank Index down 4.8%.

Technology stocks also suffered, with Nvidia and Meta sliding, while Tesla plunged 6.4% after a sharp 49.2% drop in its China-made vehicle sales. Illumina fell 2.9% following China’s ban on its genetic sequencers in response to the latest U.S. tariffs.

Consumer discretionary stocks struggled, with Target sinking 5.5% after issuing a weak full-year outlook. Best Buy plummeted 14% after warning of a demand slowdown due to tariffs. Automakers Ford and General Motors, which rely on North American supply chains, dropped 2.7% and 5.9%, respectively.

How Did the Broader Market and Volatility React?

The S&P 500 logged 38 new highs and 37 new lows, while the Nasdaq recorded 16 new highs and a staggering 484 new lows, signaling a broader market deterioration. The CBOE Volatility Index (VIX) climbed 2.35 points to hit a two-month high, reflecting growing investor anxiety.

The Russell 2000 index of small-cap stocks fell 2%, with investors increasingly worried about domestic economic resilience. Traders are now betting on increased rate cuts, with futures pricing in at least three 25-basis-point reductions from the Federal Reserve by December, up from two just a day earlier.

What’s Next for Traders?

With trade tensions escalating, markets will closely watch developments between the U.S. and its trading partners. New York Fed President John Williams’ speech later in the day could provide insight into the central bank’s stance on rate policy. Inflation risks remain in focus, as tariffs could drive higher costs for consumers and businesses.

Safe-haven assets like gold saw renewed demand, lifting bullion miners such as Sibanye Stillwater by 1.7%. Given the uncertain economic backdrop, traders will monitor upcoming economic data and corporate earnings to assess potential downside risks and opportunities.

More Information in our Economic Calendar.