U.S. Markets Tumble as Tech Sector Leads Decline
U.S. stocks experienced significant declines on Thursday, with tech companies leading the downturn as investors grappled with the unpredictability of President Trump's trade policies and mounting concerns about high market valuations and slowing economic growth.
The Nasdaq Composite, heavily weighted toward technology companies, dropped by 2.6%, officially entering correction territory. Meanwhile, the S&P 500 fell 1.8%, and the Dow Jones Industrial Average decreased by 1%. This decline followed a brief rally yesterday, spurred by the Trump administration's announcement of a one-month delay on tariffs for cars and auto parts from Canada and Mexico.
Trade Policy Uncertainty Fuels Market Volatility
In a fresh twist on Thursday, President Trump announced a postponement of tariffs on Canadian and Mexican goods compliant with the U.S.-Mexico-Canada Agreement (USMCA) until April 2—the same day reciprocal tariffs on all trading partners are slated to begin. This sudden policy reversal heightened investor anxiety, contributing to increased market volatility.
Wall Street remains wary that escalating tariffs and reciprocal responses could reignite inflationary pressures and suppress economic growth across North America. Despite Wednesday's brief reprieve for automakers, investors and business leaders are increasingly unsettled by the administration's frequent policy reversals.
Tech Stocks Bear the Brunt of Sell-Off
Major tech stocks bore the brunt of Thursday's sell-off. Semiconductor giant Broadcom (AVGO) initially plunged over 6% but rebounded sharply in after-hours trading following positive quarterly earnings results. Tesla (TSLA) and Nvidia (NVDA) both dropped by more than 5%, while Meta Platforms (META) declined approximately 4%, and Amazon (AMZN) fell by 3%. Smaller losses were seen in Microsoft (MSFT), Apple (AAPL), and Alphabet (GOOG), each declining by 1% or less.
Chipmaker Marvell Technologies (MRVL) suffered a dramatic decline of nearly 20% after its quarterly outlook fell short of optimistic market expectations. Database software provider MongoDB (MDB) fared even worse, plunging over 26% due to its disappointing future projections.
Employment Concerns Add to Market Pressure
Adding to investor concerns, a report from outplacement firm Challenger, Gray & Christmas indicated that layoffs surged last month to their highest level since July 2020. These layoffs reflect ongoing government cost-cutting initiatives championed by Elon Musk, though their full impact will not be evident in tomorrow's February jobs report due to timing discrepancies.
Market participants will nonetheless scrutinize the upcoming employment data closely, seeking signs of potential weakening in the labor market.
Broader Market Impact
On the bond market front, the yield on the 10-year Treasury note rose modestly to 4.3%, up from 4.28% at Wednesday's close, reflecting ongoing investor caution regarding inflation and Federal Reserve policy moves.
In other markets, Bitcoin closed down at approximately $89,200. Oil prices stabilized somewhat, with West Texas Intermediate crude settling around $66.30 a barrel after a sharp drop the previous day. Gold futures edged lower to roughly $2,920 an ounce, as investors sought clarity amid market turbulence.
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