The stock market remained volatile on Tuesday as investors reacted to President Trump’s announcement of increased tariffs on Canadian steel and aluminum. The Dow Jones Industrial Average (DJI) dropped 1.1%, weighed down by losses in Verizon (VZ), while the S&P 500 (GSPC) declined 0.6%, nearing correction territory. Meanwhile, the Nasdaq Composite (IXIC) managed to rise 0.4%, attempting a rebound after Monday’s heavy sell-off.
Markets initially attempted a recovery early in the session but struggled to hold gains as Trump doubled down on threats to impose higher tariffs on imported cars from Canada. His comments on Truth Social rattled investors, fueling concerns over trade disruptions and economic instability. Traders are also eyeing key inflation data set to be released later this week, which could influence Federal Reserve policy decisions.
Market Movers:
- Tesla (TSLA) +2.9% – Tesla shares rebounded after plummeting 15% in Monday’s sell-off. The recovery followed a public show of support from President Trump, who promised to “buy a brand new Tesla” as a nod to CEO Elon Musk. Investors are betting on renewed government favor toward the EV maker.
- Verizon (VZ) -7% – The telecom giant saw a sharp drop, making it the biggest drag on the Dow. Concerns over slowing revenue growth and competitive pressures from rivals weighed heavily on investor sentiment.
- Kohl’s (KSS) -16% – The retailer’s stock plunged after issuing a weak 2025 outlook. The company projected significantly lower earnings per share than Wall Street expected, citing cautious consumer spending and weaker-than-anticipated holiday sales.
- Delta Airlines (DAL) -7% – Delta shares fell after the airline cut its quarterly revenue growth forecast. The company cited a slowdown in domestic travel demand amid “macro uncertainty,” leading investors to question broader economic resilience.
- Redfin (RDFN) +67% – The online real estate company surged following news of a $1.75 billion all-stock acquisition by Rocket Companies (RKT). The deal is expected to generate significant cost savings, though Rocket’s stock fell 10% as investors weighed the financial impact.
Tariffs, Inflation, and Economic Uncertainty
Trump’s decision to raise Canadian steel and aluminum tariffs to 50% sent shockwaves through the market, particularly impacting industrial and automotive stocks. The move came in response to Ontario Premier Doug Ford’s 25% surcharge on electricity exports to the U.S. Trump further escalated tensions by threatening “substantially higher” tariffs on Canadian cars, warning that such measures would “permanently shut down” Canada’s auto manufacturing industry.
These aggressive trade policies are heightening concerns of an economic slowdown, with market analysts warning of stagflation—a period of stagnant growth and persistent inflation. Wall Street strategists at major firms have started downgrading U.S. stocks, citing increasing uncertainty over trade policy and government spending. Citi recently shifted its rating on U.S. equities to Neutral, while HSBC downgraded the country’s market outlook, favoring European stocks instead.
Labor Market Data and the Fed’s Next Move
Economic data released Tuesday showed a slight increase in U.S. job openings for January, rising to 7.74 million from December’s revised 7.51 million. While hiring remained steady, the slight uptick in the quits rate suggests workers are regaining confidence in switching jobs. However, investors are waiting for the more critical February Consumer Price Index (CPI) report on Wednesday and the Producer Price Index (PPI) on Thursday.
The Federal Reserve is closely monitoring these inflation numbers, which will play a crucial role in shaping its next interest rate decision. With uncertainty around trade, tariffs, and economic growth, the central bank may face increased pressure to adjust its policy stance in the coming months.
Looking Ahead
As markets digest Trump’s latest tariff moves, investors remain on edge about how trade tensions will impact corporate earnings and economic growth. Inflation data later this week could further sway market sentiment, with any surprises potentially triggering more volatility. Additionally, the ongoing debate over government spending cuts and potential job losses could add another layer of uncertainty.
While the Nasdaq has shown some resilience, the broader market remains under pressure. With Wall Street bracing for more political and economic turbulence, traders will be watching closely for any signs of stability—or further market turmoil—in the days ahead.