Wall Street knocked lower by tariff jitters; Musk's political plan hits Tesla
tariffs
against Japan, South Korea and other trading partners while
Tesla
shares sank after CEO Elon Musk said he was forming a new U.S.
political party
.
Indexes added to losses after Trump announced the tariff rates against Japanese and South Korean imports, due to take effect on August 1. Stocks wobbled further in the late afternoon when he announced hefty tariffs on Malaysia, Kazakhstan, South Africa, Laos and Myanmar.
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Last week, both the Nasdaq and the S&P 500 ended three sessions with record high closes. The latest record finishes came on Thursday after a robust jobs report.
"Markets had been telling us that peak tariff risk is behind us, but to have tariffs back in the forefront is causing some skittishness," said Emily Roland, co-chief investment strategist at Manulife John Hancock Investments in Boston. "Investors were getting to that period of ebullience in markets and we're taking a little step back from that."
But investors likely have some hopes the announcements are not permanent, she said: "That's the pattern we've been in, announcing punitive tariffs and then dialing that back a little bit. That could certainly be the next phase of this back and forth negotiation."
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The
Dow Jones
Industrial Average fell 422.17 points, or 0.94%, to 44,406.36, the S&P 500 lost 49.37 points, or 0.79%, to 6,229.98 and the
Nasdaq Composite
lost 188.59 points, or 0.91%, to 20,412.52.
The S&P 500's biggest drag came from shares of electric vehicle maker Tesla, which dived 6.8%, after CEO Musk announced formation of a new political party named the "America Party", further escalating his feud with Trump. It was Tesla's biggest daily slide since June 5, and its lowest closing level since that session.
Investors also awaited other U.S. trade announcements after Trump said on Sunday that the U.S. was on the cusp of several deals and would notify other countries of higher tariffs by July 9, with new duties to take effect on August 1.
On Monday, Trump threatened an extra 10% tariff on countries aligning themselves with the "Anti-American policies" of the BRICS group of Brazil, Russia, India, China and South Africa.
In early April,
stock indexes
saw dramatic volatility after Trump unveiled a base tariff rate of 10% on most countries and additional duties ranging up to 50% on April 2 and then announced a 90-day pause days later.
In early April, the Nasdaq confirmed a bear market or a 20% drop from its recent record, while the S&P 500 had narrowly averted a bear. Both indexes had returned to record levels by late June.
On Monday, 9 of the S&P 500's 11 major industry sectors lost ground. The biggest decliners were consumer discretionary off 1.25% and energy down 1.04%. The only gainers were defensive sectors with utilities adding 0.17% and consumer staples, edging up 0.11%.
Shares of WNS Holdings rallied 14.3% after the French IT services firm Capgemini agreed to buy the outsourcing firm for $3.3 billion in cash.
Trump's tariff policies have stoked inflation worries, further complicating the Federal Reserve's path to lower rates. Minutes of the Fed's June meeting, scheduled for release on Wednesday, should offer more clues on the policy outlook.
Traders are betting on a roughly 95% probability that rates will remain unchanged in July while the odds for a September cut are close to 60%, according to CME Group's FedWatch tool.
Another area of investor focus is U.S. tax-cut and spending plans, signed into law by Trump late last week. These are expected to swell the national deficit by over $3 trillion in the next decade.
On U.S. exchanges 16.50 billion shares changed hands on Monday compared with the 18.18 billion average for the last 20 trading sessions.
Declining issues outnumbered advancers by a 3.44-to-1 ratio on the NYSE where there were 209 new highs and 32 new lows.
On the Nasdaq, 1,226 stocks rose and 3,354 fell as declining issues outnumbered advancers by a 2.74-to-1 ratio. The S&P 500 posted 25 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 103 new highs and 54 new lows.
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