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05.03.2025 01:01 PM
US Market News Digest for March 5

US market faces volatility amid trade wars and economic concerns

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On Tuesday, US stock indices plunged, as if traders suddenly remembered the law of gravity. The Dow Jones lost 1.6%, the S&P 500 fell 1.2%, and the Nasdaq declined 0.4%. This could be attributed to the trade war, now reigniting with new force: 25% tariffs on Mexico and Canada went into effect, and China was hit with additional tariffs of 10-20%. Naturally, retaliatory measures followed, and markets found themselves in a state of mild panic.

The panic peaked in the middle of the day as the S&P 500 approached the critical 200-day moving average (5,725). But then, the index was supported by Nvidia (+1.7%) and Amazon (+0.9%), which temporarily pushed the Nasdaq into the green. However, the relief was short-lived. The rally quickly ran into a wave of selling, and 10 out of 11 S&P 500 sectors closed in the red. The financial sector took the hardest hit, dropping 3.5%—it seems that investors decided it was better to stay away from banking assets in the face of uncertainty. Follow the link for details.

US stock market returns to pre-election levels amid new tariffs, sparking investor concerns

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Since the presidential election, the market capitalization of the index had increased by more than $3.4 trillion, but the introduction of 25% tariffs on Mexico and Canada forced investors to cash out those profits. As a result, the stock market is back to where it was on the day of Trump's victory. Investors are now anticipating when the White House will throw the market a lifeline. Some believe it will happen when the S&P 500 returns to pre-election November levels, while others expect a 10% drop. While the president remains silent, Commerce Secretary Howard Lutnick has already hinted at a possible deal with Canada and Mexico.

Meanwhile, Treasury Secretary Scott Bessent reassures that the stock market is simply going through short-term pain, leading to America's Golden Age. However, this belief is becoming increasingly doubtful. A series of weak macroeconomic reports has undermined investor confidence: the Atlanta Fed's forecast already signals a possible contraction in US GDP in the first quarter. This has contributed to a general atmosphere of market anxiety. Adding to this are trade retaliations from other countries and Elon Musk's decision to downsize the federal workforce. Against this background, it is becoming clear that the scenario from Trump's first term, when the US economy entered a downturn, could repeat itself. Follow the link for details.

US index futures under pressure amid trade war and economic uncertainty

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After yesterday's drop, the markets attempted to rally, but, unfortunately, the bullish run was as short-lived as investors' optimism. Today, Asian trading brought only a modest recovery: the S&P 500 rose 0.1%, while the tech-heavy NASDAQ index gained 0.2%. The brief glimmer of hope yesterday came from US Commerce Secretary Howard Lutnick, who hinted that the Trump administration might consider rolling back some tariffs. However, the optimism did not last long. Just a few hours later, the euphoria faded, and the market returned to its usual downward trajectory.

Meanwhile, China added fuel to the fire by announcing that economic growth would remain at 5% through 2025, despite deflation, a crisis in the property market, and an escalating trade war with the United States. To counter this, Beijing is preparing a record budget deficit for the next 30 years, which has understandably caused some concern in the markets. The yuan weakened slightly in response to the news, but the Hong Kong stock markets unexpectedly gained on hopes of further stimulus from Chinese authorities. Meanwhile, the German government announced that it would unlock hundreds of billions of euros for defense and infrastructure investments, triggering a temporary rally in riskier assets. Follow the link for details.

Andreeva Natalya,
Analytical expert of InstaForex
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