U.S. stocks closed sharply lower after President Donald Trump dashed early hopes of a tariff-war reprieve.
Trump reiterated his proposed 25% tariff on Mexican and Canadian goods will go into effect on Tuesday.
China will also face an additional 10% tariff on Tuesday, as expected.
“Very importantly, tomorrow, tariffs, 25% on Canada and 25% on Mexico, and that will start,” Trump said during a press conference.
The broad S&P 500 slumped 1.76%, or 104.78 points, to 5,849.72, for the largest one-day loss since December, pushing the index to a loss of nearly 1% on the year. The blue-chip Dow plunged 1.48%, or 649.67 points, to 43,191.24, and the Nasdaq lost 2.64%, or 497.09 points, to 18,350.19. The benchmark 10-year Treasury yield slid to 4.161%.
Trump's comments erased earlier optimism for a last-minute deal to avert the full tariffs on the two U.S. allies. On Sunday, Treasury Secretary Scott Bessent acknowledged that Mexico proposed to match the U.S. tariffs on China to avoid being hit with Trump’s tariffs and urged Canada to follow suit.
“We’ll see. The Mexican leadership has offered to do that,” Bessent said in an interview on CBS' Face The Nation. “We haven’t heard from the Canadians, but I think that would be a very good start.”
Commerce Secretary Howard Lutnick also said on Sunday in a Fox News interview the tax that would be levied against Mexico and Canada on Tuesday was still “fluid,” meaning it could be less than the 25% that's been proposed.
Due partly to tariff worries, Wall Street's three main indexes logged their first monthly decline this year in February, with the tech-heavy Nasdaq coming close to a 10% drop from its all-time high. The Nasdaq's 4% loss marked its worst month since April 2024.
Weakening economic data are also causing jitters. A weak manufacturing report Monday could signal an even sharper economic contraction in the first three months of the year, according to the Atlanta Fed’s GDPNow tracker. The tracker updates after major economic reports and after the manufacturing report's release, it's pointing to a 2.8% annualized decline for the January-through-March period.
Later this week, investors will see labor market data, including the key February jobs report on Friday.
Corporate news
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Capri agreed to sell Versace to Prada for nearly $1.6 billion, Bloomberg reported. Shares of Capri, a luxury-fashion conglomerate, jumped 3.87%.
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Intel shares reversed its gained and ended down 4.17% after Reuters reported that chip designers Nvidia and Broadcom are both running tests on Intel’s 18A manufacturing process. If Nvidia and Broadcom decide the tests are satisfactory, they could end up becoming customers of Intel's chip-manufacturing business. Nvidia and Broadcom were down 8.69% and about 6%, respectively.
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Kroger's chief executive was ousted after its board's probe into his personal conduct. Shares of the grocery chain shed almost 3%.
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Defense stocks like Raytheon and Lockheed Martin were up around 1% after the U.S. approved a $3 billion arms deal to Israel.
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Chipotle was up fractionally after the burrito chain's chief executive said the company intends to absorb, for now, any extra costs tariffs might bring.