MARKET SNAPSHOT
U.S. stocks ended broadly lower, but well off their worst levels of the session, as investors weighed the fallout of the brewing global trade war. Treasury yields recovered late in the day as investors appeared to focus on the prospects of a military spending boom in Germany. Oil prices edged lower, paring steep losses seen earlier in the session. Gold prices rose as investors sought safe havens, while the dollar suffered its worst two-day decline since 2023.
MARKET WRAPS
EQUITIES
U.S. stocks extended their slide, pulling the Dow Jones Industrial Average into the red for 2025, after President Trump imposed tariffs on imports from Mexico and Canada.
The blue-chip average tumbled 1.6%. The S&P 500 declined 1.2%, while the tech-heavy Nasdaq Composite fell 0.4%.
Investors struggled to discern what the new U.S. tariffs on Mexican and Canadian goods and additional tariffs on Chinese imports-as well as countermeasures announced or expected from those countries-would mean for a wide variety of asset classes and the health of the economy.
Stocks fell sharply Monday afternoon after Trump reiterated that the tariffs would take effect at 12:01 a.m. The slide continued on Tuesday before the market appeared to find its footing by midafternoon. Tech stocks pulled up the Nasdaq. Then came a final downdraft in the last hour of trading.
"This is more of a market gyration based on uncertainty than anything else," said Charles Lemonides, chief investment officer of ValueWorks, a hedge fund. "We're in a period of policy transition, and we don't know how far it is going to go."
Earlier Tuesday, Chinese shares closed mostly higher after Beijing said it would impose retaliatory tariffs on certain U.S. imported goods, including agricultural products. Investors are watching for China's 2025 growth target, expected to come at the Two Sessions meeting Wednesday.
The benchmark Shanghai Composite Index rose 0.2%, the Shenzhen Composite Index gained 0.7%, while the ChiNext Price Index ended 0.3% lower. Hong Kong's Hang Seng Index gave back 0.3%, weighed by auto stocks.
Japan's Nikkei Stock Average fell 1.2% as renewed concerns about U.S. tariffs hit markets across Asia.
Stocks in Australia slipped, as the S&P/ASX 200 fell 0.6%.
New Zealand's NZX-50 index shed 0.6%, falling for a second day in a row as investors braced for the U.S. to impose tariffs against its neighbors and China.
COMMODITIES
Oil futures edged lower, with global benchmark prices ending at their lowest since November, a day after the Organization of the Petroleum Exporting Countries and its allies said they would proceed with plans to unwind some production curbs in April.
Worries over the economic outlook were also seen as a weight on crude prices as U.S. tariffs on Mexico, Canada and China took effect.
West Texas Intermediate crude for April delivery fell 0.2% to settle at $68.26 a barrel on the New York Mercantile Exchange. May Brent crude declined 0.8% to settle at $71.04 a barrel on ICE Futures Europe.
David Oxley, chief climate and commodities economist at Capital Economics, said he had assumed OPEC+ would stick to its existing plan, and therefore Monday's announcement did not require Capital Economics to change its base-case forecasts for the global oil market.
Front-month gold futures rose while other markets were pressured by the implementation of tariffs by the Trump administration. Fear over stagflation in the U.S. economy is also helping out gold, with recent economic data causing a pivot toward recession fears.
"There is growing speculation that we may be witnessing the beginning of the end of U.S. exceptionalism," said Ole Hansen of Saxo Bank.
Gold futures gained 0.7% to settle at $2,909.60 a troy ounce.
TODAY'S TOP HEADLINES
New York Fed President John Williams Sees Tariffs Feeding Inflation
New York Fed President John Williams said Tuesday that he is taking into consideration President Donald Trump's tariffs in his forecast of the economy and expects higher prices as a result relatively soon.
In an appearance at Bloomberg Invest, Williams said he had been withholding judgment until he knew Trump would make good on his tariffs promise. On Tuesday, the president enacted 25% tariffs on goods from Mexico and Canada, and an additional 10% on China.
"I do factor in some effects of tariffs now on inflation, on prices, because I think we will see some of those effects later this year, not yet, but maybe later this year," he said.
China Retaliates Against U.S. With Tariffs, Controls on U.S. Companies
China hit back at the U.S. with a slate of retaliatory measures in response to the Trump administration's latest tariff increase, escalating a trade war between the world's two largest economies.
The coordinated action across government bodies-including a series of new tariffs on American products as well as controls on U.S. companies-was announced just as the White House's additional 10% levy on all Chinese products came into effect.
Beijing said it would impose an additional 15% tariff on U.S. chicken, wheat, corn and cotton products, and an additional 10% tariff on sorghum, soybeans, pork, beef, seafood, fruits, vegetables and dairy products. The new tariffs from China are set to go into effect on March 10.
Dollar Dinged by Trump Tariffs, Suffers Worst 2-Day Decline Since 2023
The dollar suffered its worst two-day drop since 2023 after President Donald Trump initiated tariffs on Mexico and Canada, the opposite of what was "supposed" to happen. Worse still, its "safe-haven" status might also be fading.
The U.S. has enjoyed a luxury no other country has. Everyone uses the dollar to conduct trade internationally, which has made the greenback in demand through thick and thin, even as the federal government has run up a massive amount of debt. Trump's tariffs and his apparent breach with Europe on military matters could threaten that status.
Commerce to Overhaul 'Internet for All' Plan, Expanding Starlink Funding Prospects
The Commerce Department is examining changes to a $42.5 billion Biden-era program aimed at expanding internet access around the country with new rules that will make it easier for Starlink, Elon Musk's satellite-internet service, to tap in to rural broadband funding, said people familiar with the plans.
Commerce Secretary Howard Lutnick has told staff he plans to make the grant program "technology-neutral," the people said. That change will free up states to award more funds to satellite-internet providers such as Starlink, rather than mainly to companies that lay fiber-optic cables, to connect the millions of U.S. households that lack high-speed internet service.
Republicans have said the Broadband Equity, Access and Deployment Program, created by the 2021 infrastructure bill, has moved too slowly and is bogged down by unnecessary rules. Those rules effectively said states could only fund alternative technologies such as satellite in areas where it wasn't feasible or cost-effective to lay fiber cables.
Target Warns That Tariffs and Consumer Uncertainty Will Hurt Profit
Target warned that its profit would come under pressure in the current quarter-and its sales could be flat this year-because of consumer uncertainty and escalating tariffs.
The retailer's sales in February fell year-over-year because of "declining consumer confidence" and cold weather, Target finance chief Jim Lee said. Those sales trends should tick up as weather warms and the Easter holiday spurs buying, Lee said, but the retailer "will remain appropriately cautious with our expectations for the year ahead."
U.S. consumer confidence is slipping in part because of fears that the Trump administration's tariff campaign could raise prices. Walmart executives spooked investors last month when they set fiscal-year revenue and profit targets below analysts' expectations.
BlackRock Strikes Deal for Panama Ports After U.S. Pressure
A consortium of investors led by BlackRock agreed to buy majority stakes in ports on either end of the Panama Canal, putting U.S. firms in control of two ports that President Trump raised as a security concern because of their connection to China.
The deal with Hong Kong-based CK Hutchison is worth $22.8 billion and also includes dozens of other ports around the world, the companies said Tuesday.
Trump had flagged the Panama ports as a threat even though the canal is run and controlled by Panama. His administration argued China could force the two terminals, which handled 40% of all containers that crossed the waterway last year, to restrict American-bound ships.
Expected Major Events for Wednesday
00:30/HK: Feb Hong Kong Whole Economy PMI
00:30/JPN: Feb Japan Services PMI
00:30/SIN: Feb Singapore Whole Economy PMI
00:30/AUS: 4Q GDP
01:00/AUS: Feb VFACTS vehicle sales
01:00/PHI: Feb CPI
01:45/CHN: Feb China Services PMI
05:00/SIN: Jan Retail Sales
08:00/TAI: Feb CIER PMI
08:20/TAI: Feb International Reserves
21:00/SKA: Feb International Reserves
21:45/NZ: 4Q Value of Building Work Put in Place
23:00/SKA: Feb CPI
All times in GMT. Powered by Onclusive and Dow Jones.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
March 04, 2025 17:00 ET (22:00 GMT)
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