Nasdaq Briefly Turns Positive As U.S. Stocks Regain Ground After Early Sell-Off

After moving sharply lower early in the session, stocks have regained ground over the course of the trading day on Tuesday. The major averages have climbed well off their lows of the session, with the Nasdaq briefly reaching positive territory.

The tech-heavy Nasdaq is currently down 72.81 points or 0.4 percent at 18,277.38 after plunging by as much as 2.1 percent to a nearly five-month intraday low.

The Dow and the S&P 500 remain more firmly in negative territory. The Dow is down 579.05 points or 1.3 percent at 42,612.19 and the S&P 500 is down 63.70 points or 1.1 percent at 5,786.02.

The early sell-off on Wall Street came amid concerns about a global trade war after President Donald Trump’s new tariffs on imports from Canada, Mexico and China took effect.

The White House said Trump is proceeding with implementing previously paused 25 percent tariffs on Canada and Mexico to combat the extraordinary threat to U.S. national security posed by unchecked drug trafficking.

Trump also increased the tariff on Chinese imports to 20 percent from 10 percent, claiming the country has not taken adequate steps to alleviate the illicit drug crisis.

Canada responded by announcing 25 percent retaliatory tariffs on C$155 billion of American goods, starting with tariffs on C$30 billion worth of goods immediately and tariffs on the remaining C$125 billion in 21 days’ time.

In a subsequent post on Truth Social, Trump said Canada putting a retaliatory tariff on the U.S. will lead to a reciprocal tariff by the same amount.

Meanwhile, Mexican President Claudia Sheinbaum said her government has made “contingency plans” to respond to the new tariffs.

China also said it would impose additional tariffs of 10 to 15 percent on several agricultural goods, including soybeans, corn, dairy and beef.

“Investors were desperately hoping that Trump would delay tariffs on Canada, Mexico and China at the eleventh hour, yet the US president has stuck to his guns and brought them into power,” said Russ Mould, investment director at AJ Bell.

“Naturally, the recipients have started to retaliate and that has raised the prospect of a full-blown trade war,” he added. “Investors knew there was a real chance this would happen but quietly hoped it would all go away and simply be Trump having a bark worse than his bite. Not this time around.”

However, selling pressure has waned somewhat over the course of the session, leading some traders to use the steep drop as an opportunity to pick up stocks at reduced levels.

Sector News

Despite the recovery attempt by the broader markets, banking stocks continue to see substantial weakness, with the KBW Bank Index plunging by 4.1 percent after hitting its lowest intraday level in well over two months.

Significant weakness also remains visible among airline stocks, as reflected by the 3.4 percent nosedive by the NYSE Arca Airline Index. The index plummeted to its lowest level since last October earlier in the session.

Brokerage stocks also continue to see considerable weakness, resulting in a 3.3 percent slump by the NYSE Arca Broker/Dealer Index.

Steel, oil and software stocks are also seeing notable weakness, while semiconductor stocks have moved to the upside over the course of the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slumped 1.2 percent, while Hong Kong’s Hang Seng Index fell by 0.3 percent.

The major European markets also showed significant moves to the downside. While the German DAX Index plunged by 3.5 percent, the French CAC 40 Index dove by 1.9 percent and the U.K.’s FTSE 100 Index tumbled by 1.3 percent.

In the bond market, treasuries have moved modestly lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.1 basis points at 4.191 percent.

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