BY COMFORT OGBONNA
Wall Street stocks closed sharply lower on Wednesday, weighed down by losses in Tesla and Nvidia as investors remained cautious ahead of an anticipated announcement on U.S. tariffs on automotive imports.
The decline came as the White House prepared to unveil new car-industry tariffs, a move that could escalate trade tensions and have far-reaching consequences for the global economy. President Donald Trump had long signaled his intent to introduce reciprocal tariffs, with industry experts warning that the measures could lead to higher vehicle prices and disrupted production. The official announcement was expected during a press conference on Wednesday.
Shares of Tesla tumbled 5.6%, while General Motors dropped 3.1%, reflecting investor uncertainty over the scope of the tariffs and potential retaliation from trading partners. The auto sector is seen as particularly vulnerable to trade restrictions, with analysts warning of supply chain disruptions and increased costs for manufacturers and consumers alike.
“Markets hate the tariff uncertainty, especially when it pertains to autos. Autos are ground zero for the negative economic impacts of tariffs,” said Jamie Cox, managing partner at Harris Financial Group.
Technology stocks also suffered heavy losses. Nvidia slid nearly 6%, while Broadcom dropped almost 5%, pulling the PHLX Semiconductor Index down 3.3%. Investors worried that higher tariffs could exacerbate supply chain issues and dampen global demand for chips.
The S&P 500 ended the session down 1.12% at 5,712.20 points, while the Nasdaq sank 2.04% to 17,899.02 points. The Dow Jones Industrial Average fell 0.31% to 42,454.79 points.
Six of the 11 major S&P 500 sectors declined, with the information technology sector leading the losses, down 2.46%. Communication services followed with a 2.04% drop.
Investor sentiment took a hit following a survey that showed declining optimism among top business executives in the first quarter. Many companies rushed to stockpile inventories in anticipation of higher costs from trade tariffs. Additionally, fresh economic data revealed an unexpected increase in orders for durable goods, suggesting businesses were bracing for potential supply chain disruptions.
Markets are also looking ahead to key economic data later this week, particularly the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, due on Friday. The data could influence expectations for future interest rate decisions.
Minneapolis Federal Reserve President Neel Kashkari commented on the uncertainty surrounding the impact of the proposed tariffs, noting that they could push inflation higher, potentially justifying further interest rate hikes.
While broader markets struggled, some individual stocks made notable moves. Dollar Tree gained 3.1% after reports that it was close to selling its Family Dollar business to a group of private equity investors for about $1 billion.
GameStop saw an impressive 12% surge after its board approved a plan to incorporate bitcoin as a treasury reserve asset, reflecting a growing trend of corporate interest in cryptocurrency holdings.
Despite the overall decline, advancing stocks slightly outnumbered declining ones within the S&P 500 by a 1.1-to-1 ratio. The index recorded 16 new highs and six new lows, while the Nasdaq saw 33 new highs but a significantly higher 197 new lows.
Trading volume on U.S. exchanges was relatively subdued, with 15.5 billion shares changing hands, compared to the 20-session average of 16.2 billion.
As Wall Street digests the implications of the new trade policies, investors will be closely watching Friday’s inflation report for further clues on the Federal Reserve’s next moves. With markets already facing pressure from tariff concerns and tightening monetary policy, volatility is expected to remain high in the coming sessions.
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