Wall Street’s Trump Rally Fades as Economic Fears Mount
U.S. stocks took a nosedive Monday, erasing much of the post-election euphoria sparked by President Donald Trump’s November victory, after he confirmed tariffs on Canada and Mexico would hit Tuesday with no chance for last-minute deals. The S&P 500 skidded 1.8%, the Dow Jones Industrial Average cratered 649 points—or 1.5%—and the Nasdaq composite tumbled 2.6%, as Wall Street grappled with fears that Trump’s trade war could choke an already wobbly U.S. economy.
Trump’s announcement crushed hopes that he’d soften his tariff stance, leaving the S&P 500’s gains since Election Day at a measly 1%, down from a high of over 6%. “There’s no room left for negotiations,” Trump declared, slamming the door on talks with Canada and Mexico just hours before the 25% levies kick in. The news piled onto a string of gloomy economic signals, including a Monday report showing U.S. manufacturing growth slowing and new orders shrinking—blamed squarely on the tariff shock.
“Demand eased, production stalled, and layoffs continued as companies reel from the new administration’s tariff jolt,” said Timothy Fiore, chair of the Institute for Supply Management’s manufacturing survey committee. Prices are spiking too, sparking debate over who’ll foot the bill for Trump’s trade gambit. Wall Street had banked on tariffs as a negotiating bluff, not a sledgehammer—Monday’s reality check hit hard, with tech darlings like Nvidia (down 8.8%) and Tesla (down 2.8%) leading the plunge.
The market’s woes didn’t stop there. Kroger slid 3% after CEO Rodney McMullen stepped down amid a personal conduct probe, while crypto stocks like MicroStrategy (-1.8%) and Coinbase (-4.6%) fizzled despite Trump’s weekend crypto reserve tease. The S&P 500 closed at 5,849.72 (down 104.78), the Dow at 43,191.24, and the Nasdaq at 18,350.19.
Across the Pacific, Chinese manufacturers saw a February order surge as importers raced to dodge Trump’s escalating tariffs—10% now, 20% Tuesday—plus the axing of the $800 “de minimis” loophole. In Hong Kong, bubble tea giant Mixue Bingcheng soared 43% in its $444 million debut, lifting the Hang Seng 0.3%. Europe’s markets sparkled too, with Germany’s DAX up 2.6% and France’s CAC 40 climbing 1.1% on cooling inflation news, fueling bets on an ECB rate cut.
Back home, the 10-year Treasury yield dipped to 4.16% from 4.24% pre-report, a slide from January’s 4.80% peak as economic slowdown fears grow. Normally a yield drop perks up stocks, but Morgan Stanley’s Michael Wilson warns this one’s tied to grim growth vibes—not a Fed lifeline. With inflation jitters lingering, the Fed’s hands may be tied, leaving markets on edge.