Three days of relative peace were broken on Wall Street, with big tech driving major stock benchmarks lower, as concern about a trade war’s impact on the economy and inflation resurfaced to squelch risk appetites. In late hours, a $589 billion exchange-traded fund tracking the S&P 500 (SPY) dropped as President Donald Trump signed an order to implement a 25% tariff on auto imports, expanding a trade war designed to bring more manufacturing jobs to the US and setting the stage for an even broader push on levies next week. American automakers General Motors Co. and Ford Motor Co. fell.
The move comes ahead of an announcement of so-called reciprocal tariffs expected April 2 — a bid to drive down other countries’ barriers and shrink US trade deficits. Federal Reserve Bank of St. Louis President Alberto Musalem said it’s not clear any inflationary impact from tariffs will prove temporary, and cautioned that secondary effects could prompt officials to hold rates steady for longer.
“Uncertainty on the tariff front remains ridiculously high, leaving it incredibly tough for businesses or consumers to plan more than about a day into the future, and still making it nigh-on impossible for market participants to price risk,” said Michael Brown, a strategist at Pepperstone.
Equities slipped on Wednesday, led by losses in the group of “Magnificent Seven” megacaps — whose quarterly rout is set to be the worst since 2022. Nvidia Corp. and Tesla Inc. dropped at least 5.5%. Microsoft Corp. has walked away from new data center projects in the US and Europe, said TD Cowen analysts. A gauge of big banks snapped a streak of eight straight days of gains.
The S&P 500 slid 1.1%, failing to stay above its key 200-day moving average. The Nasdaq 100 fell 1.8%. The Dow Jones Industrial Average dropped 0.3%. A Bloomberg gauge of megacaps sank 3%. The Russell 2000 slipped 1%.
The yield on 10-year Treasuries advanced three basis points to 4.35%. The dollar gained 0.3%.
“Today was a reminder that despite the recent rebound in stocks, volatility remains as policy uncertainty lingers,” said Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.
