dow jones today: Stock Market Today: Dow Jones down 141 Points, S&P 500 falls

The U.S. stock market experienced major swings on Monday, February 3, 2025, after President Donald Trump announced new tariffs on imports from Mexico, Canada, and China. Investors feared the tariffs could spark a global trade war, leading to disruptions in global supply chains, rising inflation, and slower economic growth. However, a quick turn of events helped stock prices recover.At the start of the day, the U.S. stock market saw a sharp decline. The Dow Jones Industrial Average dropped as much as 665 points, reflecting concerns about the impact of the tariffs. The S&P 500 fell by nearly 2%, and the Nasdaq Composite lost more than 1%. These losses came after President Trump announced a 25% tariff on goods from Mexico and Canada, while imposing a 10% levy on imports from China. Energy imports from Canada faced a 10% tariff as well.

Investors worried that these tariffs could lead to a trade war that would hurt global economic stability. Major U.S. automakers, tech companies, and Canadian banks saw their stocks drop sharply due to these trade concerns.

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Mexico announces a delay, and Stocks recover

Later in the day, Mexico’s President Claudia Sheinbaum confirmed a pause in the tariffs for one month after speaking with President Trump. She wrote on social media, “We had a good conversation with President Trump with great respect for our relationship and sovereignty; we reached a series of agreements.” Trump also confirmed the pause on Truth Social, saying that Mexico would send 10,000 soldiers to the border between the U.S. and Mexico.This announcement led to a rapid recovery in the stock market. The Dow Jones Industrial Average, which had fallen over 600 points earlier, was down just 141 points, or 0.3%. The S&P 500 was down 0.7% after earlier losses of 1.93%. The Nasdaq Composite slid about 1%. The quick rebound suggested that investors were relieved by the temporary deal and were optimistic that a more permanent solution could be reached.

Why the market rebounded

The pause in tariffs on Mexico helped calm investors’ fears. Traders believe that President Trump may be using the tariffs as a negotiating tool rather than as a permanent strategy. Thierry Wizman, a global FX and rates strategist at Macquarie, said, “We still think that permanent tariffs on the U.S.’s allies (Canada, Mexico) will not be a thing.” Investors see this as a sign that Trump will make deals to avoid a long-term trade conflict.

Certain sectors of the market were more affected by the tariff news than others. U.S. automakers, such as General Motors and Ford, initially saw their stock prices drop but later recovered. GM was last down 1%, and Ford was little changed by the end of the day.

In the tech sector, companies like Nvidia, Dell Technologies, and Broadcom experienced declines due to their exposure to Chinese markets. The Technology Select Sector SPDR Fund (XLK), which tracks the performance of major tech stocks, fell more than 2%.

What impact do tariffs have on Canadian banks?

Canadian banks that are traded in the U.S. were hit hard in the early trading session. The five largest Canadian banks saw significant declines in their stock prices after the tariff announcement. Canadian Imperial Bank of Commerce tumbled by 8%, and Bank of Nova Scotia fell by 7.5%. The U.S. and Canada’s trade relations have a major impact on these financial institutions, and the uncertainty raised concerns among investors.

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What key economic reports should investors watch this week?

As the market dealt with tariff news, investors were also focusing on other important data for the week. Over 120 companies in the S&P 500 are scheduled to report their fourth-quarter earnings this week, including major tech companies like Alphabet, Amazon, and Palantir, as well as consumer giants like Walt Disney and Mondelez.

Additionally, the U.S. Labor Department is set to release the January nonfarm payrolls report on Friday, with economists expecting 175,000 new jobs to be added last month. These earnings reports and labor market data will play a key role in shaping market expectations moving forward.

FAQs:

How did U.S. tariffs affect the stock market today?
U.S. tariffs caused a sharp initial drop in stocks, but the market quickly recovered after the announcement of a temporary pause on tariffs.

What happened to the Dow Jones, S&P 500, and Nasdaq today?
The Dow Jones fell 141 points, the S&P 500 dropped 0.7%, and the Nasdaq slid 1%, but all indices showed signs of recovery by the end of the day.