Gregg Maloney, a specialist, is seen at his workstation on the floor of the New York Stock Exchange (AP Photo/Richard Drew)
Wall Street opened the week on a rough note as major stock indexes dropped Monday, dragged down by renewed trade tensions sparked by former President Donald Trump. The White House sent warnings to key U.S. allies, urging them to strike trade deals before steep new tariffs kick in next month.
The S&P 500 slipped by 0.8%, marking its biggest one-day loss since mid-June. Meanwhile, the Dow Jones Industrial Average dropped 0.9%, and the Nasdaq Composite followed suit, falling 0.9%—all reversing from record highs reached just days earlier.
Tesla Dips Amid Musk-Trump Rift
Tesla shares plunged by 6.8%, making it the worst-performing stock in the S&P 500 for the day. The drop followed a weekend clash between Tesla CEO Elon Musk and Trump. Once an ally, Musk announced plans to launch a third political party in protest of the Republican-backed spending bill, stirring political and investor anxiety.
Tariff Letters Stir Global Unease
The Trump administration escalated trade pressure by sending formal letters to Japan and South Korea, announcing that a 25% tariff would be applied to their goods from August 1. The letters warned that any retaliatory tariffs from these countries would result in even higher U.S. tariffs. Trump also extended his tariff list to include Malaysia, Kazakhstan, South Africa, Laos, and Myanmar.
This renewed trade stance came just days before a 90-day tariff delay—granted in April to encourage deal-making—was set to expire. Trump hinted at imposing an additional 10% tariff on BRICS nations, a group that includes Brazil, Russia, India, China, and South Africa. The bloc had previously criticized Trump's tariff moves at a summit in Brazil.
Analysts Eye Risk of Slowdown
Economists warned that aggressive tariffs could weigh down global trade and spark recession fears. Bill Northey, investment director at U.S. Bank, noted the return of trade worries disrupted an otherwise strong market rally. Analysts from Nomura emphasized that the short-term market direction depends on how broadly these tariffs are applied and how long they stay in place.
Vietnam Trade Deal Sets a Precedent
In a glimmer of diplomacy, Trump finalized a trade deal with Vietnam, allowing U.S. goods to enter duty-free, while Vietnamese exports to the U.S. will face a 20% tax—down from an earlier 46% proposal. Analysts say this type of agreement may serve as a model for other countries that rely heavily on trade with the U.S.
Most Sectors in the Red
Nine of the eleven sectors in the S&P 500 ended lower. Technology, finance, and consumer-related stocks weighed heavily on the index. Apple fell 1.7%, JPMorgan Chase dropped 1.4%, and Home Depot declined 1.1%.
Molina Healthcare slipped 2.9% after reducing its profit forecast due to rising medical costs. Similarly, UnitedHealth Group cut its outlook last month after a spike in expenses, causing its stock to plummet.
Big Deal in Crypto Mining
In merger news, software company CoreWeave announced a $9 billion all-stock acquisition of Core Scientific, a crypto mining firm. Despite the deal, Core Scientific’s stock plunged 17.6%, while CoreWeave slipped 3.3%.
Oil Prices Climb, Bond Yields Rise
Oil prices swung higher after OPEC+ revealed it would boost production by 548,000 barrels per day starting in August. U.S. crude rose to $67.93 per barrel, up 1.4%, while Brent Crude settled at $69.58, a 1.9% increase.
Meanwhile, bond yields edged up, with the 10-year Treasury yield rising to 4.39% from 4.34% last week.
Market Outlook Hinges on Fed & Tariffs
With few major economic reports due this week, investors will focus on the Federal Reserve’s meeting minutes, set to be released on Wednesday. Fed Chair Jerome Powell has indicated a “wait and see” approach, saying the central bank won’t act on interest rates until the economic effects of Trump’s tariffs become clearer.
Lower interest rates typically boost the economy by making borrowing easier, but they also risk stoking inflation—especially if import costs spike due to tariffs.
Market Recap
- S&P 500: Down 49.37 points to 6,229.98
- Dow Jones: Lost 422.17 points to 44,406.36
- Nasdaq: Fell 188.59 points to 20,412.52
While U.S. markets sank, European indexes mostly rose, and Asian markets closed lower. The dip follows a strong week for U.S. stocks that were buoyed by an upbeat jobs report.
