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Wall Street closed sharply lower on Thursday, pulled down by tech and discretionary stocks. The Nasdaq Composite confirmed that it has moved into a correction phase, weighed down by the current uncertainty surrounding U.S. trade and tariffs. All of the three most widely followed indexes closed the session in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1%, or 427.51 points, to close at 42,579.08. Nineteen components of the 30-stock index ended in negative territory, while 11 ended in positive.
The tech-heavy Nasdaq Composite slid 483.48 points, or 2.6%, to close at 18,069.26.
The S&P 500 lost 104.11 points, or 1.8%, to close at 5,738.52. Nine of the 11 broad sectors of the benchmark index closed in the red. The Technology Select Sector SPDR (XLK), the Real Estate Select Sector SPDR (XLRE) and the Consumer Discretionary Select Sector SPDR (XLY) declined 2.8%, 2.7% and 2.5%, respectively, while the Energy Select Sector SPDR (XLE) advanced 0.3%.
The fear-gauge CBOE Volatility Index (VIX) increased 13.4% to 24.87. A total of 16.13 billion shares were traded on Thursday, higher than the last 20-session average of 16.08 billion. Decliners outnumbered advancers by a 2.87-to-1 ratio on the NYSE.
Trump Administration Tariff Uncertainty Spooks Markets
A stock market bloodbath was witnessed on Thursday, with tech stocks leading the decline as President Trump's unpredictable trade policies exacerbated market jitters. The tech-focused Nasdaq Composite slumped, putting the tech-heavy index in correction territory. It is now more than 10% off its Dec. 16 record high and officially entered into correction territory. The losses made were broad-based across stock indexes. However, some of these losses were pared after the Trump administration announced a one-month delay to tariffs on cars and car parts from Canada and Mexico.
Still, Wall Street remains concerned that Trump's tariff policy and the reciprocal tariffs they are leading to could regenerate inflation and slow economic growth across North America. The stock market is yet to completely price in the uncertainty surrounding the tariff announcements and stepbacks that have characterized the government’s trade policies over the last month. Big tech stocks are suffering in particular.
Consequently, shares of Tesla, Inc. TSLA and NVIDIA Corporation NVDA plunged 5.6% and 5.7%, respectively. NVIDIA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
Per the Department of Labor, revised fourth-quarter productivity came in at an increase of 1.5%. Earlier, it was reported to rise 1.2%. It’s the ninth straight upward move in U.S. productivity. Unit Labor Costs were revised to a 2.2% increase compared to the 3% reported earlier.