Dow Drops 650 Points, S&P 500 Loses Post-Election Gains as Trump’s Trade War Escalates

On Tuesday, the stock markets were sharp-taking blows as President Trump announced new tariffs on Canada, Mexico, and China. The S&P 500 (^GSPC) wiped out its post-election gains, while the Dow Jones Industrial Average (^DJI) sunk more than 650 points, about 1.5 percent. The S&P 500 lost about 1.2%, reaching a four-month low, and the ever-volatile Nasdaq Composite (^IXIC), which had been relatively green for most parts of the day, succumbed to closing down 0.4 percent, narrowly avoiding a possible correction.

The Definition of Trump’s Tariffs – S&P 500

Markets have yet again neared towards psychological turmoil with the introduction of the latest tariffs levied by the Trump regime. At midnight ET on Tuesday, new tariffs came into effect: 25% on any imports from Canada and Mexico, and a 20% increase on the duties for goods imported from China. In retaliation, Canada was fast and immediately released retaliatory tariffs on imports from the U.S., while China declared that it would impose an increase of 15% on tariffs for U.S. farm products such as chicken and pork as from March 10.

This type of retaliation was nothing in comparison to accusations and fury that analysts expected from China’s side. However, most experts still believe that there is room for negotiations between the president of the United States and China.

Retailers Feeling the Crimp

The new tariffs are also beginning to affect retailers. S&P 500 stock Target (TGT) had announced that the tariffs would impact the company’s first-quarter directly earning results, even though the company updated its earnings ahead of what analysts had expected. Even so, Target shares are not being affected early on.

Similarly, S&P 500 stock Best Buy (BBY) recorded perfect quarterly earnings; however, its tempered annual sales outlook raised eyebrows regarding consumer caution and brought its shares down.

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Flutter Earnings Surprises

Averaging a good after-hours session, Flutter (FLUT) stock was up 3% on Tuesday. EPS in the fourth quarter stood at $2.94, beating the Wall Street estimates of $1.73 per share. Revenue was also weaker than anticipated, coming in at $3.79 billion versus the anticipated figure of $3.83 billion. The strong quarter was due to unprecedented customer engagement around the Super Bowl. Peter Jackson, CEO, noted that the company saw nearly half a billion dollars wagered and peak levels of 17,000 bets per minute.

Despite any wider concerns over possible slowdowns in consumer spending, Jackson felt confident, attributing this to the gambling industry having been resilient through tough times in the past. On the back of this, Jackson reaffirmed Flutter’s 2025 U.S. revenue guidance in line with the analysts’ expectation.

The Trump Trade: From Euphoria to Retreat

The stock markets such as S&P 500 had witnessed a post-election euphoria on expectations of tax cuts and deregulation under the Trump administration; this high warmth has quickly vanished. The fears of a slowdown are being further fueled by tariffs and some disappointing economic data; many sectors which were expected to shine under the Trump administration are now showing signs of weakness.

The Russell 2000 (^RUT), which seemed to be on a high after Trump’s election win, fell by about 8% since November 5. The small-cap stocks could benefit from Trump’s policies, including regional banks, but it just has not materialized.

Energy (XLE) and Industrials (XLI) rallied sharply post-Trump Election based on expectations of mergers and acquisitions and lesser regulations; both sectors have since dwindled by about 3%. Financials (XLF) have been the only bright spot up about 7% since November.

Even Bitcoin was another asset that found favor among investors looking for a hedge in the post-election phenomenon; however, it has lost significant steam. After hitting above $100,000 per coin late last year, Bitcoin is now trading at around $85,000, representing a 22% decline from its high in January.

Gas Prices on the Upswing

The tariffs of the Trump administration are expected to affect the price at the pump. All Canadian oil products will attract 10 percent tax under the new tariff measures, along with a 25 percent tax on all other Canadian items. Thus, this is going to raise fuel prices for many users around the New England and Midwest zones, which heavily rely on Canadian oil.

It is estimated that gas will go up between $0.20 and $0.40 per gallon over the next few months in states like Maine, Vermont, and Massachusetts. A month ago, the national average for gasoline was around $3.10 per gallon on Tuesday, about what it was a month ago; however, benzene is still 25 cents cheaper than at this time last year.

Intel’s Troubles in the Wake of Rivalling TSMC’s $100 Billion Investment to the U.S.
The shares of Intel (INTC) plunged by 6% Tuesday after news broke that its Taiwanese rival TSMC (TSM) will make a $100 billion investment in US manufacturing capabilities. The news comes at a time Intel has also experienced a miniature rally, partly fueled by wishes that its new chip manufacturing technology would attract the interest of AI chip designers like Nvidia and Broadcom.

Now that TSMC has made such a huge investment in the U. S. chip industry, Intel would seem to be suffering more now that it has been unable to match rivals’ performance. This would also raise eyebrows if indeed, this was going to be better for the U.S., as opposed to betting on struggling Intel.

Financials Lead Market Downturn

Tuesday’s market was seas of red with all 11 sectors closing in negative territory. The best-performing sector was financials (XLF), down 3 percent, followed by Consumer Discretionary (XLY) and Industrials (XLI), both down at 1.5 and 1.4 percent, respectively.

Within the tech sector, Nvidia (NVDA) rebounded by 2% after a sharp drop the previous day, while it was also upbeat for Alphabet (GOOG, GOOGL), which also saw a 2% uptick. Meanwhile, S&P 500 stocks Meta (META) and Tesla (TSLA) kept struggling with a fall of around 3% and 5%, respectively.

Conclusion

The S&P 500 trade war initiated by the Trump administration and the tariffs consequent to it shook the stock market, resulting in some serious losses by many major indexes. It is indeed going to be noticed by all in various sectors once the tariffs actually start to bite into the economy and with all the additional earnings announcements by companies. Investors now have to grasp how the trade war continues to mold the economic scene.

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