The S&P 500 plunged over 10% below its peak as President Trump intensified the trade war by raising tariffs on Canadian steel and aluminum. This move sparked a 1.4% drop in the S&P 500 and a 1.7% decline in the Dow Jones Industrial Average. The market instability reflects investor anxiety over Trump’s unpredictable trade policies and their impact on the economy.

Trump’s tariff threats have created uncertainty, leading to drastic market fluctuations where the S&P 500 swung by at least 1% seven times in the past eight days. This volatility is fueled by concerns about the economic repercussions of tariffs and other policy decisions.

Companies like Delta Air Lines and Southwest Airlines are already feeling the effects, with Delta cutting its revenue growth forecast for early 2025 by half due to changing customer confidence. Despite these challenges, some companies, like Southwest Airlines, have implemented strategic changes to mitigate losses and adapt to the shifting economic landscape.

In the technology sector, Big Tech stocks like Tesla and Nvidia showed resilience amidst the market turmoil. Tesla received a boost after Trump expressed support for the company, while Nvidia managed to trim its losses for the year. However, the broader market sentiment remains cautious, with uncertainties looming over the long-term outlook for U.S. exceptionalism.

Internationally, stock markets in Europe and Asia experienced declines, while some positive developments in China aimed to stimulate its slowing economy. In the bond market, Treasury yields stabilized after previous declines, reflecting ongoing concerns about the U.S. economic outlook.

Overall, while the U.S. job market remains relatively strong, the market’s reaction to trade tensions and policy uncertainties underscores the challenges and complexities facing investors in navigating the current economic landscape.