MANILAU. As the Trump administration increases pressure on trading partners to reach agreements before a Wednesday deadline, U.S. markets are declining in afternoon trading Monday.
On the first day of trading in the United States following a week cut short by holidays, the S&P 500 was down 0.9%. The benchmark index is still close to the record high it reached last week.
At 1:12 p.m. Eastern time, the Nasdaq composite was down 0.9% and the Dow Jones Industrial Average was down 485 points, or 1.1%.
On the New York Stock Exchange, decliners were more than three times as many as winners.
Over the weekend, the conflict between President Donald Trump and CEO Elon Musk resurfaced, causing Tesla to plummet 7.4%, the largest decline among S&P 500 equities. In protest of the Republican spending package that was passed last week, Musk, a former Trump buddy and major donor, announced that he will create a third political party.
After the Trump administration issued letters alerting South Korea and Japan to a 25% tariff on their goods beginning on August 1st due to ongoing trade imbalances with the two important Asian allies, the selling escalated.
The 25% that we charge will be increased by the amount you decide to raise your tariffs, if you decide to do so for whatever reason. Trump wrote to South Korean President Lee Jae-myung and Japanese Prime Minister Shigeru Ishiba.
Over the weekend, Trump informed reporters that if an agreement isn’t reached by Wednesday, his administration will write to a number of foreign governments as early as Monday outlining their tariff rates.
Additionally, he declared that he would levy an extra 10% in tariffs on the developing countries that make up the BRICS alliance, which had denounced tariff hikes during its summit in Brazil. The BRICS nations are South Africa, China, India, and Russia in addition to Brazil.
The specter of more severe tariffs looms over the world economy once more as the 90-day respite in U.S. tariffs against a broad list of countries is about to end.
Bill Northey, senior investment director at U.S. Bank Asset Management, stated that the market has somewhat paused after a solid week last week due to the return of that meaty topic to the forefront.
According to analysts at Nomura, the near-term picture will probably depend on a number of important elements, including the rate of tariffs, the date on which they go into effect, and the degree to which Trump letters include trading partners.
The Trump administration said last week that it had achieved an agreement with Vietnam that would impose a 20% tax on Vietnamese exports to the United States while allowing duty-free entry of U.S. goods into the nation. That was less than the 46% tax he had suggested in April on Vietnamese imports.
According to Jason Pride, chief of investment strategy and research at Glenmede, the kind of agreement reached with Vietnam might serve as a model for comparable nations in the area whose economies are mostly dependent on significant trade deficits with the United States.
The S&P 500 index was down across the board, with consumer and technology firms leading the way.
Chipotle Mexican Grill saw a 3.1% decline, while Oracle saw a 1.7% decline.
After the insurer reduced its profit guidance due to rapidly rising costs, Molina Healthcare saw a 1.8% decline. Additionally, UnitedHealth Group recently disclosed a cost increase that compelled them to lower its projection, which caused its shares to plummet in April.
In deal news, CoreWeave, a software business, agreed to buy Core Scientific, a cryptocurrency mining company, for all of its stock in a deal for over $9 billion. Core Scientific’s stock fell 16.6%, and CoreWeave’s fell 3.5%.
In general, bond yields increased. Late Thursday, the yield on the 10-year Treasury increased from 4.34% to 4.38%.
The negative start to the week comes after stocks had a solid run, pushing further into record highs following a better-than-expected U.S. jobs report last week.
Europe’s stock indexes were generally higher. Asian markets ended the day largely down.
Following OPEC+’s agreement on Saturday to increase production by 548,000 barrels per day in August, oil prices varied.
The worldwide benchmark, Brent crude, was up 1.6%, while the U.S. benchmark was up 0.7%.
There won’t be a lot of economic statistics this week. The minutes of the Federal Reserve’s policymaking committee meeting from last month will be made public on Wednesday.
Jerome Powell, the Fed’s chair, has been certain that the central bank wants to hold off on raising interest rates until after Trump’s tariffs have had an impact on inflation and the economy. Lower interest rates help the economy by making borrowing simpler, but they can also increase inflation. That might be risky if tariffs imposed by the Trump administration increase inflation.
