On Tuesday, a promising relief rally in the stock market rapidly turned sour, reflecting the volatile atmosphere as a significant tariff deadline loomed. The Dow Jones Industrial Average experienced a staggering swing of over 2,200 points, with prior gains for major players like Apple and Tesla swiftly evaporating.
As announced, a staggering 104% tariff on imports from China is set to kick in at 12:01 a.m. ET on Wednesday. This impending action significantly impacted market sentiments, causing the Dow to plunge. Despite peaking with a gain of more than 1,450 points earlier in the day, it ultimately closed down 350 points, nearly a 1% loss, reversing about 1,800 points from its highest point during the session.
The tech-heavy Nasdaq showcased similar trends, initially rallying before a steep decline led to a closing loss of 2.2%. The S&P 500, after an enthusiastic start, fell by 1.6%, marking its first close below the 5,000 mark in a year. All major indexes remain below their 200-day moving averages, indicating a bearish trend.
Small-cap stocks faced the hardest hit, with the Russell 2000 plummeting by 3.5%. Trading volume significantly dropped on both the Nasdaq and the New York Stock Exchange, where decliners outnumbered advancers by a substantial margin of about 3-to-1.
In bond markets, the yield on the benchmark 10-year Treasury increased by nine basis points to 4.25%. Crude oil prices also saw a decline, settling around $58.55 per barrel. Economic perspective shifted as the National Federation of Independent Business reported a decrease in the small business optimism index to 97.4 in March, from an anticipated 98.9.
Several large-cap stocks turned negative after earlier gains. Nvidia, which surged nearly 7% at one point, ultimately closed down 1.4%, falling below the $100 mark. Similarly, Palantir Technologies reversed a 9% gain to close just under break-even, while Apple retraced a 4% rise by losing an additional 5%, continuing its downward spiral this year with a 31% year-to-date drop. Tesla also faltered, transitioning from a 6% gain to a nearly 5% loss.
Other stocks faced notable declines, including Atour Lifestyle Holdings, which fell nearly 7% below its 200-day moving average, and Amer Sports, also down more than 7%.
In response to increasing tariff tensions, statements from President Trump indicated that the U.S. may impose additional tariffs if China does not retract its recently announced tariffs. Treasury Secretary Scott Bessent commented that China is miscalculating its strategy, suggesting that other nations might be more amenable to negotiations.
However, not all sectors performed poorly. Cruise line stocks, including Norwegian Cruise Line and Carnival, displayed resilience, spurred by recent partnership announcements. Additionally, Broadcom gained traction following a stock buyback announcement.
In a surprising turn, healthcare stocks benefited from favorable news concerning Medicare Advantage payments. Companies like Humana and UnitedHealth saw significant gains, with Humana climbing almost 11% and reclaiming a crucial moving average.
As the market grapples with uncertainty, investors are advised to exercise caution and adhere to risk management strategies. Understanding when to exit positions and identifying opportunities for new buys become paramount in navigating this turbulent landscape.
