S&P 500: Nvidia Sinks, Ford and GM Slide as Trade Tensions Lift Healthcare and Utilities

Tariffs Stoke Volatility as Markets Struggle for Direction

U.S. markets faced another turbulent session as renewed trade tensions rattled investor confidence. Stocks initially plunged after President Trump imposed fresh tariffs on Mexico, Canada, and China, but an afternoon announcement pausing Mexico’s tariffs for one month helped indexes trim losses. The Dow Jones Industrial Average, which was down as much as 665 points, recovered to trade just 150 points lower. The S&P 500 shed 0.9%, while the Nasdaq lost more than 1%.

Sector performance reflected the market’s struggle for direction. Technology suffered the steepest losses, while defensive plays such as healthcare and consumer staples posted gains. With tariffs remaining a key risk factor and global supply chains under threat, volatility is likely to persist in the near term. While some stocks stand to benefit from shifting trade policies, others could face continued pressure.

Which Sectors Could Face the Biggest Challenges?

Technology stocks led the decline, with the sector falling 1.79%. The tariffs on China and looming restrictions on European imports threaten supply chains for major tech giants. Semiconductor firms such as Nvidia and Intel, which rely on overseas manufacturing, could see higher input costs that squeeze profit margins.

Industrials, down 0.6%, also face uncertainty as manufacturers depend on global suppliers for raw materials. Heavy equipment makers like Caterpillar and Boeing could struggle if prolonged trade disputes disrupt operations. The financial sector, slipping 0.51%, is another area of concern, as trade uncertainty may weigh on corporate lending and capital investment.

Where Could Investors Find Opportunities?

Healthcare led sector gains, rising 0.8%, as investors shifted toward defensive names less affected by trade risks. Communication services also climbed 0.51%, signaling resilience in select growth stocks. Consumer staples, up 0.77%, benefited from safe-haven demand as investors rotated into more stable businesses.

Energy eked out a modest 0.3% gain, supported by expectations that trade-related disruptions could affect global oil flows. If tariffs continue to reshape supply chains, these sectors could maintain their relative strength in a volatile market.

Auto and Retail Stocks in the Crosshairs

Automakers Ford and General Motors, which heavily rely on North American supply chains, tumbled before recovering some losses. Any escalation in tariffs with Mexico could drive up production costs, potentially hurting sales if vehicle prices rise. Similarly, retailers like Walmart and Target, which source significant inventory from China, could see profit margins come under pressure if higher import costs are not passed to consumers.

What Comes Next for the Market?

Although the temporary pause on Mexico tariffs helped markets stabilize, uncertainty remains high. The threat of additional tariffs on the European Union, combined with existing levies on China and Canada, suggests volatility will persist. Traders will be watching for economic data, including the January nonfarm payrolls report, as well as earnings from major companies like Alphabet, Amazon, and Disney.

With trade negotiations still evolving and geopolitical risks looming, markets may struggle to find a clear direction in the short term. Defensive sectors and cash-rich companies could outperform, while trade-sensitive stocks may remain under pressure as investors navigate the next phase of tariff uncertainty.

More Information in our Economic Calendar.