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By Sinéad Carew and Alun John
NEW YORK/LONDON (Reuters) -After falling sharply on Monday, equities were losing ground again on Tuesday, though at a slower pace, as U.S. President Donald Trump said he would double tariffs on Canadian metal imports, fuelling worries that tariffs could help cause an economic recession.
But U.S. Treasury yields turned higher along with oil prices even as Trump said on Tuesday that he had instructed his commerce secretary to add an additional 25% tariff on all steel and aluminum coming into the United States from Canada, bringing the total tariff on those products to 50%.
On Monday the S&P 500 suffered its biggest one-day drop this year, while the Nasdaq saw its biggest single-day percentage drop since September 2022. This was in reaction to President Trump's weekend Fox News interview, in which he declined to rule out a recession resulting from his trade policies, and talked about a "period of transition."
Adding to concerns about tariffs, Tuesday's data showed U.S. small-business confidence dropped for a third straight month in February, wiping away much of the gains notched in the aftermath of Trump's November election victory.
Along with the confidence slump, Phil Blancato, chief market strategist at Osaic Wealth in New York, pointed to guidance from Delta Airlines and retailer Kohl's for a softening of consumer spending ahead.
"You see all these headlines suggesting a slowing of the U.S. economy so you're not getting the classic dead cat bounce you'd want after a day like yesterday," said Blancato.
"You're not seeing a lot of bottom feeders come in just yet. It's because the headlines haven't cleared up yet. There's still a lot of uncertainty in a lot of areas and it's leading to a lack of institutional buying power."
While investors will be hoping for some clarity on tariffs by early April, Blancato noted that they are also anxiously awaiting Wednesday's U.S. consumer price index reading for February for information on inflation conditions.
A high reading would add to last month's hotter-than-expected data, which included the biggest monthly price gain since August 2023.
At 12:08 p.m. the Dow Jones Industrial Average was down 483.32 points, or 1.15%, at 41,428.39, the S&P 500 had dropped 40.90 points, or 0.73%, to 5,573.66 and the Nasdaq Composite was off 47.75 points, or 0.27%, at 17,420.81.
MSCI's gauge of stocks across the globe fell 6.31 points, or 0.76%, to 826.42. The pan-European STOXX 600 index fell 1.8%.