Traders work on the floor of the New York Stock Exchange on Feb. 13, 2025
Danielle DeVries | CNBC
The markets swung between gains and losses Tuesday after President Donald Trump placed additional tariffs on Canadian steel and aluminum coming into the U.S., rekindling more uncertainty about trade policy that has weighed on markets the last three weeks. Losses earlier in the session briefly put the S&P 500 on course for a correction before the benchmark rebounded in the afternoon.
At the moment, the S&P 500 was trading slightly lower. At its low of the session, the S&P 500 was 10% below its record close reached in late February. The Dow Jones Industrial Average lost 223 points, or 0.6%. The Nasdaq Composite was trading 0.7% higher as investors snapped up some technology stocks that have seen the brunt of the selling the last three weeks.
The S&P 500 was in the green at one point during the trading session before Trump declared on Truth Social that Canadian steel and aluminum duties would double to 50% from 25%, effective Wednesday. This is the latest in a series of disorderly trade policy moves that have stoked fears of tipping the U.S. economy into a recession.
Major averages recovered again later in the session, aided by buying in beaten-up technology shares like Tesla and Nvidia. News that Ukraine has agreed to a ceasefire in a plan negotiated by the U.S., also helped boost sentiment.
S&P 500, 1-day
On Monday, the Nasdaq saw its worst day since September 2022, dropping 4%. The 30-stock Dow lost nearly 900 points. Citigroup this week lowered its rating on U.S. stocks to neutral from overweight, pointing to a “pause in U.S. exceptionalism” as the reason.
“There’s clearly a tolerance for pain on the part of the administration in pursuit of trade goals that are not necessarily entirely economic in nature,” said Ross Mayfield, Baird investment strategist. “At this point I’m still in the camp that we’re not on the doorstep of a recession, but maybe a slowdown or growth scare. Non-recession sell-offs tend to be shorter and milder than the recessionary ones.”
Delta Air Lines added to recession worries Tuesday, as the airline slashed its earnings outlook due to weaker U.S. demand, pushing the stock down more than 8%. Other travel-related stocks followed suit with Disney down nearly 5% and Airbnb off by 4%.
Along with haphazard tariff moves, comments from the administration in recent days has stoked investors’ fears about the economy. Over the weekend Trump said the economy was going through “a period of transition.” The remarks arrived after Treasury Secretary Scott Bessent told CNBC on Friday that there could be a “detox period” for the economy as the Trump administration slashes federal spending.
Investors are eagerly anticipating the release of February’s consumer price index due Wednesday.
“It’ll be really important that we don’t see an upside surprise on CPI because at this point, the Fed does have plenty of dry powder to step in to cut rates and try to boost demand if the economy were to meaningfully slow,” Mayfield added. “But they can only really do that if they feel that inflation expectations and inflation are well anchored.”
