Traders work on the floor of the New York Stock Exchange during morning trading on March 04, 2025 in New York City.
Michael M. Santiago | Getty Images
The Dow Jones Industrial Average tumbled on Tuesday as President Donald Trump’s tariffs left investors fearful of potential shockwaves for the economy.
The blue-chip dropped 412 points, or 0.9%, building on Monday’s plunge of nearly 650 points. The S&P 500 dropped 0.5% after notching its worst day of the year in the prior session. The Nasdaq Composite added 0.3%, boosted by gains of more than 2% in Nvidia.
Stocks were able to rebound significantly in afternoon trading. The Dow fell more than 840 points and the S&P 500 slid 2% at session lows. The Nasdaq had dropped more than 2% at its lowest and at points flirted with correction territory, a term that refers to an index falling 10% from a recent high.
Nasdaq Composite, 1-day
All three indexes had plunged in morning trading as investors initially responded to the U.S.’ 25% duties on Canada and Mexico that took effect at midnight. Trump also slapped an additional 10% tariff on Chinese goods.
China retaliated with additional tariffs of up to 15% on some U.S. products, while Mexican President Claudia Sheinbaum said the U.S.’ southern neighbor would respond with tariffs that would be announced this weekend. After Canadian Prime Minister Justin Trudeau said his country would also put a 25% levy on U.S. goods, Trump said in response that he would add even higher tariffs on the country.
While the broader market was able to make up ground as the session went on, shares of companies with significant imports remained under pressure. Shares of GM and Ford dropped around 3% and 2%, respectively. Chipotle, which sources about half of its avocados from Mexico, slipped more than 2%.
Nvidia‘s rebound offered a bright spot for investors in the session. The popular stock’s swing into the green brought its year-to-date loss to just over 12%, which has been driven in part by a 7% drop in the last five trading days alone. In addition to Nvidia, rallies in Super Micro Computer, Alphabet and Palantir also gave the tech-heavy Nasdaq upward momentum late in the day.
Still, this week’s decline pushed the S&P 500 into the red for 2025. Because investors hoped that a last-minute deal could be reached to sidestep the full taxes on Mexico and Canada, losses steepened in Monday’s session after Trump confirmed the long-awaited levies were coming.
“I’m calling it a conditional correction,” said Sam Stovall, chief investment strategist at CFRA Research. “It’s really based on one condition: By how much Trump is going to retain the tariffs.”
Paired with soft economic data released recently, the tariffs have given market participants further reason for worry about the health of the U.S. economy. Bank and retail stocks led the way down on Tuesday as investors feared that the levies would hurt these sectors, which are viewed as being closely tied to the broader economic landscape.
“We tend to believe these are more of a negotiation tactic and not the start of a long and drawn out reciprocal trade war,” said Clark Geranen, chief market strategist at CalBay Investments. “Still, in these situations, investors sell first and ask questions later.”
With Tuesday’s losses, the S&P 500 now trades with striking distance of where it finished on Election Day in November, when Trump won his second term in office. Traders will closely monitor Trump’s address to Congress on Tuesday night for statements about the tariffs, which were a core pillar of his campaign.
