March 4, 2025

In one of the worst collapses from a higher start that we have seen this difficult time, the market once again turned a briefly higher opening into a historic type of crash once again as the market continued to wipe out more of their gains since the current President’s election in November as this time things collapsed after he said that his tariffs announced earlier on Canada and Mexico would take effect within hours.

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The Dow ended with a huge collapse of 650 to 43,191 after a fast 194 positive start as once again the old-time stocks managed to sneak out some positive gains – AMGN, KO, JNJ, MRK, PG and VZ.

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The S&P really got blasted with a 104 point closing decline to 5849 after another briefly higher start of 32 that could not hold either after the President said there was “no room left” for negotiations that could lower the tariffs set to begin today for imports from Canada and Mexico. He had already delayed the tariffs once before to allow more time for talks.

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His announcement dashed hopes that he would choose a less painful path for global trade, and it followed the latest warning signal on the U.S. economy’s strength. Monday’s loss shaved the S&P’s gain since Election Day down to just over 1% from a peak of more than 6%. That rally had been built largely on hopes for policies from the President that would strengthen the U.S. economy and businesses.

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The Nasdaq also gave up a brief higher start of 145 to get completely blasted lower to a 497 point decline down to 18,350 on severe selling in technology while the Russell 2000 Index of small stocks was the real loser with a 60 point collapse down to 2102 on selling in financials.

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The VIX loved this downside disaster and made a large gain up to 22.78, which was the highest since last December.

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Monday’s slide punctuated a rocky couple of weeks as after the S&P set a record last month following a parade of fatter-than-expected profit reports from big U.S. companies, the market began diving following weaker than expected reports on the U.S. economy, including a couple showing households are getting more worried about inflation because of the threat of tariffs.

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The latest such report arrived yesterday on U.S. manufacturing. Overall activity is still growing, but not by quite as much as economists had forecast. Perhaps more discouragingly, manufacturers are seeing a contraction in new orders. Prices, meanwhile, rose amid discussions about who will pay for Trump’s tariffs, as the ISM Manufacturing Supply Index fell by 0.6% to 50.3 and the price index rose by 7.5 to 62.4.

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“Demand eased, production stabilized, and de-staffing continued as panelists’ companies experience the first operational shock of the new administration’s tariff policy,” said the chair of the Institute for Supply Management’s manufacturing business survey committee.

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The hope on had been that the President was using the threat of tariffs as a tool for negotiations and that he would ultimately go through with potentially less damaging policies for the global economy and trade. But his going forward with the Mexican and Canadian tariffs hit a market that wasn’t certain about what would happen next.

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The market’s recent slump has hit former favorite NVDA’s and some other formerly high-flying areas of the market particularly hard. They fell even more on Monday, with it down by 8.8% and TSLA turning a gain into a decline of down 2.8%. This came about after a so-called big-time expert went out of his way to raise his price target on this one to at least 450 this year.

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KR fell 3% after the grocery chain’s Chairman and C.E.O. resigned following an internal investigation into his personal conduct.

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The awful showing even pulled down stocks of companies in the cryptocurrency economy, which had risen strongly in the morning. They initially bounced after Trump said over the weekend that his administration was moving forward with a “crypto strategic reserve.”

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But MSTR, the company now known as Strategy and has been raising money to buy bitcoin, slid to a loss of 1.8% after its talkative C.E.O. went on television to sign the praises of this one, which has lost around 40% of its value. COIN, the crypto trading platform, fell 4.6%.

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In China, manufacturers reported an uptick in orders in February as importers rushed to beat higher U.S. tariffs and a Chinese state media report said that Beijing was considering ways to retaliate.

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Trump had imposed a tariff of 10% on imports from China, and that is scheduled to rise to 20% beginning Tuesday. He also ended the “de minimis” loophole that exempted imports worth less than $800 from tariffs.

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Indexes rose by even more across Europe and in Tokyo. European markets leaped after a report showed an easing of inflation in February. That should help the European Central Bank, which investors widely expect will deliver another cut to interest rates later this week. They have done much better than the U.S. indices this year.

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In the bond market, the yield on the 10-year Treasury fell to 4.16% from 4.24% just before the manufacturing report’s release. It has come down sharply since January, when it was approaching 4.80%, as worries have built about the possibility of a slowing U.S. economy.

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Earnings this week will see: today – OKTA higher and BBY, TGT lower; tonight – CRWD, JWN; Wednesday – ANF, CPB, Victoria’s Secret, ZSK; Thursday – BURL, COST, GPS, M.

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Economic reports are: today – January construction spending slipped by 0.2%, ISM Supply Manufacturing Index slipped by 0.6%  to 50.3 while the price increase rose by 7.5% to 62.4;  Wednesday – January factory orders; Thursday – January trade balance, weekly jobless claims; Friday – February jobs report for which the estimate is 160,000 and the unemployment rate remains at 4%.