Topline
The U.S. stock market sold off Monday morning as Wall Street digested President Donald Trump’s tariffs on Canadian, Chinese and Mexican goods set to go into effect Tuesday, before recovering some after Trump announced the Mexican levies won’t start for at least a month.
Stocks slumped Monday in response to Trump’s impending tariffs.
Key Facts
Broad indexes tumbled Monday morning, as the benchmark S&P 500 fell 1.5% by mid morning, the blue chip Dow Jones Industrial Average dropped 1.1%, or 470 points, and the tech-concentrated Nasdaq dipped 1.9%.
Once Trump confirmed the Mexico tariffs would be delayed a month, markets bounced back some, with the Dow down just 0.2%, the S&P 0.6% and the Nasdaq 1% by about 11:30 EST.
After more than 90% of the S&P’s 500 constituents were negative early Monday, less than 60% were down by late morning, and the companies hardest hit by the tariff slide largely fell into four buckets: alcoholic beverage purveyors, automakers, multinational technology firms with heavy China exposure and cryptocurrency-focused companies.
Shares of Constellation Brands (-3%), which controls the U.S. distribution for Mexican beers Corona and Modelo, tanked to their lowest level since October 2020, though the stock had dropped as much as 8% earlier.
American car companies, an industry heavily reliant on Canadian and Mexican imports, also flailed, with car stocks declining across the board, including Ford (-1%), General Motors (-1%), Jeep parent Stellantis (-3%) and Elon Musk-led Tesla (-5%), though losses were much thinner than they were earlier, when Ford and Tesla traded down 5% and 7%, respectively.
Tesla was particularly battered as it joined Apple (-4%) and Nvidia (-2%), as American multinational companies with the highest proportion of sales in China.
Crypto-heavy stocks pared back a stark morning drop as crypto prices recovere from their weekend dive as shares of leveraged bitcoin whale MicroStrategy turned what was an 8% loss to a less than 1% one, while exchanges Coinbase (-2%) and RobinHood (-1%) and bitcoin miner Marathon Digital (-4%) stayed red.
Big Number
About 5%. That’s how much of a hit the S&P’s fair-value price would take, Goldman Sachs strategists led by David Kostin wrote in a late Sunday note to clients. Goldman estimates a 2% to 3% total hit to corporate earnings directly from the tariffs and a further ding as policy uncertainty causes the market to reassess the historically lofty price-to-earnings ratios now enjoyed by American stocks.
Bitcoin Leads Crypto Losses From Trump’s Tariffs
Digital asset prices have tanked in recent days, with bitcoin down 5% since Friday to about $99,000, while the next most valuable crypto tokens, ethereum network’s ether and Ripple’s XRP, are down more than 10% apiece since Friday. The selloff has wiped off nearly $300 billion in market value for crypto since Friday, according to CoinGecko, as the global crypto market fell to its lowest level since mid-November at $3.37 trillion. The crypto correction came as investors largely fled riskier assets and the dollar strengthened, a negative for bitcoin as it tends to weaken when the dollar shows its weight as the de facto global reserve currency.
Tangent
Should the tariff-inspired losses continue, it’ll be the second consecutive brutal start to the week for U.S. equities. The S&P and Nasdaq fell 1.5% and 3.1%, respectively, last Monday as the market reacted to the release of a comparatively cheaply developed artificial intelligence model from China’s DeepSeek. Nvidia also led those losses, falling 17% and losing a record $590 billion in market value. The American AI leader Nvidia fell to its lowest intraday share price since early September this Monday. Stocks recovered some of their DeepSeek losses last week, as the S&P rose 0.5% and the Nasdaq 1.5% from Tuesday to Friday, before falling further Monday.
What To Watch For
How Wall Street reacts as the trade conflict progresses. “The equity market had been leaning toward a gradual/measured approach on China and tariffs on Mexico/Canada that either wouldn’t be imposed or would be very short-lived,” according to Morgan Stanley chief equity strategist Michael Wilson, who predicted the “market’s previous baseline view is likely to be tested the longer these tariffs stay on.”
Crucial Quote
“The fundamental concern raised by the latest announcements is that tariff policy applied towards achieving non-economic objectives may broaden and tilt the US policy mix into a far less business-friendly stance,” Bruce Kasman, JPMorgan Chase’s global head of economic research, wrote Monday, signaling the broader Wall Street agita that Trump may pursue further actions unpopular among growth and bottom line-focused investors.
