Stock Market Slumps as Dow Dips 600 Points, Nasdaq Approaches Correction with Trade War Escalating: Updates

U.S. stock markets took another hit on Tuesday as President Donald Trump’s tariffs on Canada, Mexico, and China officially went into effect. This sparked a wave of retaliatory measures, making investors even more jittery about the future of the economy.Stock Market Slumps as Dow Dips 600 Points, Nasdaq Approaches Correction with Trade War Escalating.

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The Dow Jones Industrial Average fell 647 points, or 1.5%, while the S&P 500 and Nasdaq Composite both dropped around 1.5% as well. The Nasdaq is now flirting with “correction” territory — a 10% drop from its recent highs.

The market decline follows the U.S. imposing a 25% tariff on imports from Canada and Mexico, which started at midnight. Trump also added a 10% tariff on Chinese goods, which led to swift reactions. China responded with new tariffs on U.S. products, some as high as 15%, while Canada announced it would slap a 25% levy on American goods. Mexican officials, led by President Claudia Sheinbaum, said they would respond with their own set of tariffs, which they plan to reveal later this week.

Impact on Major Companies

The effects of these tariffs are already being felt by some major players. Shares of General Motors and Ford fell by 3% and 2%, respectively. These automakers are concerned that the new trade barriers will raise production costs. Chipotle, which imports around half of its avocados from Mexico, saw its stock drop by more than 2%.

This latest wave of selling has pushed the S&P 500 into negative territory for the year and has left the Dow barely holding onto any gains for 2025. After investors had hoped for a last-minute deal to avoid the tariffs, the reality of the trade war’s escalation hit hard on Monday, making the market’s losses even steeper. Adding to the uncertainty, soft economic data recently released has raised more questions about the U.S. economy’s strength.

Clark Geranen, Chief Market Strategist at CalBay Investments, weighed in on the situation: “While the tariffs are in place, it’s unclear how long they’ll last. We believe these are more of a negotiation tactic rather than the start of a prolonged trade war. However, in these types of situations, investors tend to sell first and ask questions later.”

Dow’s 2025 Gains Under Threat

The Dow‘s slide on Tuesday came dangerously close to wiping out its remaining gains for 2025. After falling 1.5% during the session, the index stood at roughly flat for the year, and at certain points, it even dipped into negative territory.

Stocks in Decline: Semiconductor Sector Takes a Hit

As the day wore on, the sell-off deepened, especially in the semiconductor sector. Once the darlings of the stock market, semiconductor stocks are now in a slump, according to Jonathan Krinsky, Chief Market Technician at BTIG. He pointed out that the VanEck Semiconductor ETF (SMH), which tracks the 25 largest U.S.-listed semiconductor companies, has seen no significant gains over the past year, with some stocks now approaching multi-year lows.

“Semiconductors are at or near multi-year relative lows,” Krinsky said. “A breakdown at this point could leave a lot of recent buyers underwater, creating significant overhead resistance.”

Premarket Movements

The stock market opened lower on Tuesday, and several high-profile companies saw significant moves even before the bell rang. Shares of Stellantis, Ford, and GM dropped after a statement from the American Automotive Policy Council suggested that automakers complying with the U.S.-Mexico-Canada Agreement should be exempt from tariff hikes. In premarket trading, Stellantis slipped 3.4%, GM lost 1%, and Ford fell 0.6%.

Shares of Nvidia continued to slide, dropping another 3% after a nearly 9% drop on Monday, fueled by concerns over how tariffs and export restrictions would impact its operations in China. Tesla also faced a setback, with shares down 3% after data showed its sales of China-made vehicles had fallen nearly 50% year-over-year in February.

Bitcoin Takes a Hit

Bitcoin’s price also struggled, dropping by 2% to $83,508.78, and erasing all the gains it made after President Trump announced plans for a U.S. crypto reserve. After reaching record highs in January, the cryptocurrency has now fallen by 23% from its all-time peak.

Wall Street’s ‘Fear Gauge’ Jumps

Wall Street’s anxiety was reflected in the CBOE Volatility Index (VIX), which climbed by more than 1 point as the trade war intensifies. Known as the “fear gauge,” the VIX saw its biggest one-day spike of the year on Monday, jumping more than 3 points as Trump confirmed the tariffs would move forward. This has heightened fears of a prolonged trade conflict.

Target and Tesla Earnings Updates

Meanwhile, Target reported better-than-expected fourth-quarter results, earning $2.41 per share on revenue of $30.92 billion. However, the company also warned of weak sales in February, leading the stock to trade mostly flat. On the other hand, Tesla’s struggles continued after data showed that its vehicle sales in China had dropped sharply in February.

International Markets React

The ripple effects of U.S. tariffs were felt around the world. In Europe, stock markets took a hit, with Germany’s DAX down 1.5%, France’s CAC 40 down nearly 1%, and the U.K.’s FTSE 100 dropping 0.66%. Asian markets followed suit, with Japan’s Nikkei 225 falling 1.2% and South Korea’s Kospi down 0.15%. Chinese stocks also saw some volatility as investors monitored the country’s annual parliamentary meeting, known as the “Two Sessions.”

CoreWeave’s IPO Amid Market Woes

In other news, CoreWeave, a cloud-based GPU provider catering to big names like Meta and Microsoft, filed for an IPO. The company, which saw rapid growth after the rise of AI technologies like ChatGPT, generated $1.92 billion in revenue last year, with more than half of it coming from Microsoft.

However, the timing of the IPO is a bit complicated. The stock market has been volatile, and Nvidia, one of CoreWeave’s key partners, just took a massive hit after Trump’s tariff announcement.

After-Hours Movements

In after-hours trading, a few stocks made headlines:

• GitLab rose 4% after reporting stronger-than-expected earnings.
• Okta soared 15% after posting better-than-expected results, while AST SpaceMobile saw a modest 2% gain after a less-than-expected loss.

As for the broader market, futures traded slightly above the flatline on Monday night, with the Dow and S&P 500 each up 0.2%.

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