The stock market closed lower on Thursday, with the Nasdaq officially entering a correction phase since December, as concerns over U.S. trade policy continued to weigh on investor sentiment.
President Donald Trump announced that goods covered by the U.S.-Mexico-Canada trade agreement (USMCA) from Canada and Mexico would be exempt from the recently imposed 25% tariffs for a month. This decision followed a previous exemption for automotive goods announced the day before. Initially, Trump had only mentioned an exemption for Mexico, but later expanded it to include Canada as well.
Mark Malek, the chief investment officer at SiebertNXT in New York, commented on the situation, saying, “The fog of confusion is getting thicker by the moment unfortunately. We are getting a lot of just different conflicting information: tariffs are on, tariffs are off, some tariffs are off and so forth.”
The S&P 500 index saw declines in ten out of eleven sectors, with consumer discretionary, real estate, and technology stocks experiencing the largest losses. The energy sector was the only gainer. The Nasdaq confirmed a 10.4% drop from its December 16 level, marking a correction. The S&P 500 briefly dipped below its 200-day moving average during the session, indicating potential further declines if it breaks significantly lower.
The CBOE Volatility Index closed at 24.87, its highest level since December 18, reflecting increasing market anxiety.
The Dow Jones Industrial Average fell 427.51 points to 42,579.08, the S&P 500 lost 104.11 points to 5,738.52, and the Nasdaq Composite dropped 483.48 points to 18,069.26.
Bill Sterling, global strategist at GW&K Investment Management, expressed concern about the impact of shifting policy pronouncements on investor confidence and the economy. He also noted that the scale of the tariffs could lead to inflation.
In the equity market, General Motors and Ford both saw declines, while Tesla dropped 5.6% following a bearish rating from Baird. Marvell’s nearly 20% slump after disappointing results weighed on the semiconductor sector, with Broadcom and Nvidia also trading lower.
Kroger’s stock rose 2% after forecasting strong annual same-store sales.
Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions in Boston, highlighted the impact of geopolitical news and economic data on investor sentiment. He noted that economic indicators were showing signs of slowing, contributing to market uncertainty.
Data showed a larger-than-expected decrease in new unemployment benefit applications last week, with investors awaiting Friday’s payrolls data. Market expectations suggest the Federal Reserve could cut interest rates by 25 basis points in June, according to LSEG data.
Philadelphia Fed President Patrick Harker warned of brewing trouble in the economy, citing stress in the consumer sector and inflation risks.
Declining issues outnumbered advancers on the NYSE, with 76 new highs and 151 new lows. The S&P 500 and Nasdaq Composite recorded new highs and lows, with total trading volume slightly below the 20-day average.
Overall, the market faced turbulence driven by trade uncertainties and economic signals, with investors closely monitoring developments amid changing policy announcements and mixed economic data.
