S&P 500: Benchmark Nears Correction as Delta’s Demand Warning Sparks Sector Losses

Dow Sinks 500 Points as Trade Tensions Escalate with Canada

The Dow Jones Industrial Average tumbled 520 points, or 1.2%, on Tuesday after former President Donald Trump announced an additional 25% tariff on Canadian steel and aluminum, bringing total duties to 50%. The S&P 500 fell 1%, while the Nasdaq Composite slipped 0.8%. Markets remain under pressure following Monday’s steep losses, driven by escalating trade tensions and concerns over economic growth.

How Did Major Indexes Perform?

The Dow’s decline followed Monday’s nearly 900-point drop, which pushed the index below its 200-day moving average for the first time since November. The Nasdaq suffered its worst session since September 2022, falling 4%, and has now entered correction territory, down more than 10% from its recent peak. The S&P 500 remains 9% below its all-time high set in February.

Citigroup downgraded U.S. stocks to “neutral” from “overweight,” citing concerns about fading market momentum. Investors are also weighing Trump’s economic policies, including potential federal spending cuts that Treasury Secretary Scott Bessent warned could trigger a “detox period” for the economy.

Which Sectors Took the Hardest Hit?

Losses were broad-based across sectors, with financials leading the decline, dropping 1.3%. Industrials fell 1.71%, weighed down by uncertainty over trade policies. Energy stocks lost 1.02%, while materials and healthcare sectors each declined more than 1%.

Consumer discretionary stocks held up slightly better, falling 0.68%, while technology stocks lost 0.79%, showing relative resilience after Monday’s sharp sell-off. However, the majority of the S&P 500 is already in correction territory—73% of its components are at least 10% below their 52-week highs, while 203 stocks are in bear market territory, down more than 20%.

Which Stocks Were in Focus?

Delta Air Lines plummeted more than 8% after cutting its earnings outlook, citing weaker U.S. demand. The airline’s warning raised concerns about consumer spending and economic softness, adding to the market’s risk-off sentiment.

Crypto-related stocks rebounded after heavy losses on Monday. Coinbase surged 6%, and Robinhood gained 5% after both hit their lowest levels since 2022. Bitcoin recovered 2% to trade near $80,921 after briefly dipping below $77,000 overnight. Crypto Valley Exchange CEO James Davies highlighted Bitcoin’s role as a “super cyclical” asset, reacting swiftly to market stress before rebounding.

What’s the Market Outlook?

Traders are awaiting key inflation data, with February’s Consumer Price Index (CPI) and Producer Price Index (PPI) set for release on Wednesday and Thursday. A higher-than-expected CPI reading could dampen hopes for Federal Reserve rate cuts, adding pressure on equities.

If inflation remains contained, the Fed may have room to support markets, but trade policy concerns and economic uncertainty remain key risks. Traders will be watching these data releases closely for signs of future market direction.

More Information in our Economic Calendar.