S&P 500 stumbles amid tariff threats

The S&P 500 failed to escape another day of losses Tuesday amid a roller-coaster trading session. The index closed down about 0.5%. It is nearing a 10% decline from its February highs.

This comes after President Donald Trump announced a new 50% tariff threat on Canada. The threat was in response to the imposition of an electricity surcharge there. The back-and-forth may have left a bad taste for investors.

The S&P 500 traded near correction territory to start the week. @KristenScholer explains in the Market Update. pic.twitter.com/yc2erKf5gD

— NYSE 🏛 (@NYSE) March 11, 2025

They were already dealing with additional signs of softening in the U.S. economy. The tech-heavy Nasdaq fell 0.2%, and the Dow Jones Industrial Average dropped nearly 500 points, or 1.2%.

Earlier Tuesday, the airline industry flashed warning signs. Three major carriers separately warned in the past 24 hours they were seeing signs of slowing demand.

This was compounded by ongoing jitters in the wake of the midair crash of an American Airlines plane and a military helicopter over the Potomac River near Washington, D.C., in January.

Stock Market LIVE: Sensex erases gains to trade 250 points lower, Nifty around 22400; IT index cracks 3.5%#Sensex #Nifty #StockMarket https://t.co/whZNmIBBFw

— ET NOW (@ETNOWlive) March 12, 2025

In a filing, American Airlines said that “the revenue environment has been weaker than initially expected due to the impact of Flight 5342 and softness in the domestic leisure segment, primarily in March.” Delta reported that its revenues were affected “by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in domestic demand.” Southwest Airlines also slashed its earnings guidance for the rest of the year. Investors are throttling back their expectations for stocks amid growing uncertainty.

Editor’s Take | The Rupee has stopped falling, and Crude is on the decline. With Rupee stability, FII flows, and IPO momentum—are macro indicators pivoting? Too late to be bearish? Here’s @nikunjdalmia’s take! 📉 #Markets #Economy #Investing pic.twitter.com/aOMC01Bs4j

— ET NOW (@ETNOWlive) March 12, 2025

With today’s additional decline, the S&P is very close to correction territory— that is, down 10% from its recent high of just three weeks ago. The Nasdaq got there last week.
The longer this selloff continues, the more economists will worry about “negative wealth effects”… pic.twitter.com/AcI1JXCLLt

— Mohamed A. El-Erian (@elerianm) March 11, 2025

Tariff threats shake investor confidence

A White House spokesperson said Tuesday that the market losses merely represented “a snapshot of a moment in time. “As President Trump has said, we are in a period of economic transition from the mess created under Joe Biden.

Trump later stated that he foresaw no recession and that the United States would “blow it away.” This comes as Trump is leaning less on market sentiment at a time when markets’ performance is set to be noticeably weaker. Early Monday, Citigroup analysts downgraded their U.S. stock rating from “overweight” to “neutral.” They cited a “pausing” in U.S. firms’ financial performance amid weaker jobs growth and a short-term momentum loss for artificial intelligence investments. This was the second significant downgrade from a Wall Street firm in as many days.

Barclays analysts issued new guidance that the picture for U.S. stocks is rapidly changing. “The U.S. economy is softening, despite an OK jobs report. U.S. equities have de-rated quickly, but don’t depend on a ‘Trump Put’ yet,” they said.

Investors received another piece of concerning news on Monday. The National Federation of Independent Business reported its monthly small-business optimism survey showed a decline in February. The index remained above the 51-year average for a fourth consecutive month.

“Uncertainty is high and rising on Main Street, and for many reasons,” NFIB Chief Economist Bill Dunkelberg said in a release. Trump was set to meet with U.S. executives at the Washington-based Business Roundtable later Tuesday. Investors will be looking to see whether he provides new guidance about his tariffs or broader economic policy objectives.

Wednesday could prove a further turning point in markets’ trajectories as the Bureau of Labor Statistics will report consumer inflation data for February. Forecasts suggest a slightly softer reading compared with January, implying price growth may have slowed. Any deviation could ripple through markets.

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