Stock Market Update: Nasdaq and S&P 500 Face Significant Declines

The Dow Jones Industrial Average fell by 1%, translating to a loss of over 400 points, while the S&P 500 experienced a nearly 2% drop. The tech-heavy Nasdaq Composite saw a staggering decline of more than 2.6%, officially entering correction territory as it now sits over 10% below its record high from December.

Impact of Tariff Decisions on Market Sentiment

Uncertainty surrounding trade policies has kept investors on edge, particularly regarding how far President Donald Trump is willing to go with tariffs. On Thursday, Trump announced a pause on tariffs for certain Mexican goods, a decision that was later extended to include goods from Canada. This move has led to a mixed reaction in the markets, as investors weigh the implications of these tariffs on economic growth.

Tech Sector Takes a Hit

The technology sector has been at the forefront of this market retreat, particularly following Marvell’s quarterly report, which indicated expectations for a more significant payoff from AI initiatives. The company’s shares plummeted nearly 19%, contributing to losses for other chipmakers such as Nvidia, Broadcom, and AMD.

Jobless Claims and Economic Concerns

Investors are also digesting the latest jobless claims data released on Thursday morning, which showed 221,000 initial claims—down from the previous week and below economist expectations. This recent trend of soft economic data has raised concerns about a potential stall in US economic growth, reviving fears of a recession.

As the market reacts to these developments, analysts are closely monitoring the upcoming jobs report set for release on Friday morning. According to Kaiser, a strong jobs report could provide some relief, but it may not be sufficient to stabilize the markets. “If we see a weak print, particularly if the unemployment rate rises, we could witness a significant pullback in US equities,” he warned.

Tariff Compliance and Market Dynamics

Goods compliant with the United States-Mexico-Canada Agreement (USMCA) will not face tariffs for the time being. However, approximately 50% of Mexican imports and 62% of Canadian imports are reportedly non-compliant and will incur a 25% tariff. This situation adds another layer of complexity to the market dynamics as investors navigate these changes.

Analysts Adjust Tesla Outlook

In a note published Thursday morning, analysts at Baird revised their 12-month outlook on Tesla shares, lowering it from $440 to $370. They cited concerns that Wall Street’s expectations for Tesla’s first-quarter deliveries may be overly optimistic. The firm highlighted potential production disruptions related to the Model Y refresh and the impact of Elon Musk’s involvement with the Trump administration on demand.

“Intra-quarter sales data from Tesla’s key regions suggest there is a risk to the consensus Q1 delivery estimate of 437.5K,” Baird’s team noted. “Production downtime associated with the Model Y refresh complicates the supply-side, while Musk’s political involvement adds uncertainty to the demand-side.”

Inflation Concerns Amid Tariff Increases

Treasury Secretary Scott Bessent commented on the current economic climate, stating, “I am not worried about inflation” resulting from the recent tariff increases. However, he acknowledged the possibility of a one-time price adjustment. His remarks came after Trump announced additional tariffs on China, Mexico, and Canada, affecting the Big Three automakers and various goods and services under the USMCA.

As the market continues to react to these developments, investors remain vigilant, closely monitoring economic indicators and policy changes that could influence market trends. For more detailed insights, visit the original article.