U.S. stocks declined sharply Monday afternoon as the Trump administration increased pressure on trade partners ahead of looming tariffs. The market opened for the first time after the holiday-shortened week and saw immediate losses, interrupting last week’s record-setting momentum.
By midafternoon, the S&P 500 had fallen 1.2%, remaining close to its all-time high. The Dow Jones Industrial Average dropped 641 points, or 1.4%, while the Nasdaq composite slipped 1.3%. On the New York Stock Exchange, declining stocks outnumbered gainers by more than 5 to 1.
Tesla saw the steepest drop among S&P 500 companies, plunging 7.4%, after tensions reignited between CEO Elon Musk and former ally President Donald Trump. Over the weekend, Musk criticized a Republican spending bill and announced plans to launch a third political party, breaking ties with Trump.
Investor nerves were rattled after the White House sent formal notices to Japan and South Korea, warning that goods from those nations would face a 25% tariff starting August 1. The letters cited long-standing trade imbalances. Trump added that if those countries increased their own tariffs, the U.S. would raise its own by an equal amount on top of the 25%.
The administration also said it would notify other countries on Monday of potential tariff hikes if trade deals weren’t reached by Wednesday, ending a 90-day grace period during which most imports faced a lower, 10% tariff. Trump further escalated tensions by promising a 10% tariff on imports from BRICS countries—Brazil, Russia, India, China, and South Africa—after they criticized U.S. trade policy during a summit in Brazil.
“The renewed focus on tariffs, especially after last week’s strong market gains, has investors pausing,” said Bill Northey, senior investment director at U.S. Bank Asset Management.
Analysts at Nomura believe the market’s direction in the coming weeks will depend heavily on which countries are targeted, the level of tariffs imposed, and when they take effect.
Last week, the U.S. reached a trade deal with Vietnam, allowing American goods to enter the country without tariffs, while Vietnamese exports to the U.S. will face a 20% levy—down from a proposed 46%. Jason Pride, head of investment strategy at Glenmede, said this agreement might serve as a model for similar economies in Asia with large trade surpluses with the U.S.
All sectors in the S&P 500 traded in negative territory, with technology, financials, and consumer-focused stocks weighing the most. Apple fell 2.2%, JPMorgan Chase lost 2%, and Home Depot declined 1.7%.
Healthcare stocks also struggled. Molina Healthcare dropped 3.5% after lowering its profit outlook due to rising costs. UnitedHealth Group, which issued a similar warning in April, had also seen its stock decline.
In M&A activity, CoreWeave, a software company, announced it will acquire cryptocurrency miner Core Scientific in an all-stock deal valued at $9 billion. Core Scientific shares fell 18.1%, and CoreWeave shares dropped 4.8%.
Bond yields edged higher, with the 10-year Treasury yield climbing to 4.39% from 4.34% last Thursday.
The losses follow a strong performance last week, driven by better-than-expected job data. While European markets were mostly up, Asia saw mixed results with most markets closing lower.
Oil prices fluctuated after OPEC+ agreed on Saturday to raise production by 548,000 barrels per day starting in August. U.S. crude gained 0.6%, while Brent crude rose 1.2%.
This week, the economic calendar is light. Investors are looking ahead to Wednesday’s release of minutes from the Federal Reserve’s latest meeting. Fed Chair Jerome Powell has said the central bank is taking a wait-and-see approach on interest rates, watching to see how tariffs affect inflation and economic growth. While lower rates can support borrowing and spending, they may also fuel inflation, especially if new tariffs drive up prices.
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Wall Street Declines as Trump Targets Trade Partners with New Tariffs
