The U.S. stock market fell immediately after President Donald Trump announced his intention to impose tariffs, and Nvidia’s stock plummeted by over 8%.
On Thursday, the Dow Jones Industrial Average fell 0.45%, the S&P 500 lost 1.59%, and the Nasdaq fell 2.78% in New York trading.
The Nasdaq’s significant drop was primarily due to a sell-off in tech stocks, triggered by Nvidia’s steep decline of over 8%.
Trump declared on his social media platform, Truth Social, that a 25% tariff on Mexico and Canada would take effect on March 4, after the one-month moratorium ends.
He also stated that China, which already faces a 10% tariff from the U.S., would be subject to an additional 10% tariff.
Tariffs typically raise import prices, contributing to inflation. Higher inflation reduces the likelihood of further interest rate cuts, which is generally bad news for the stock market.
Moreover, Nvidia’s 8.48% plunge fueled a broader sell-off in tech stocks.
The market reaction was disappointing despite Nvidia’s reported earnings and forecasts that exceeded market expectations the previous day.
Trump’s announcement of tariffs on China also contributed to Nvidia’s stock price drop, as the Chinese market accounts for a large proportion of the company’s revenue.
As Nvidia plummeted, other major tech stocks followed suit.
The electric vehicle sector showed mixed performance, with Tesla falling by 3.04%, while Rivian rose by 1.75%,
The semiconductor sector saw widespread declines following Nvidia’s 8.48% drop. The Philadelphia Semiconductor Index, which tracks semiconductor stocks, plunged 6.09% at the close.
Meanwhile, although unemployment benefit claims surged on this day, it didn’t significantly impact the market. Investors are now shifting their focus to the Personal Consumption Expenditures (PCE) price index, which will be released on Friday. The PCE is the Federal Reserve’s preferred inflation gauge.