New York Stock Market Falls Amid Reciprocal Tariff Concerns and Inflation Worries

Tech Stocks Tumble as Trump Announces Upcoming Tariff Plans

The New York stock market closed lower on February 7, driven by heightened market uncertainty following U.S. President Donald Trump's announcement of plans to impose reciprocal tariffs, coupled with renewed inflation concerns. This double blow caused significant declines across major indexes, with technology and electric vehicle stocks taking the hardest hit.

On Wall Street, the Dow Jones Industrial Average dropped 444.23 points, or 0.99%, to close at 44,303.40. The S&P 500 Index fell by 57.58 points, or 0.95%, ending at 6,026.99, while the tech-heavy Nasdaq Composite plummeted 268.59 points, or 1.36%, to settle at 19,523.40. The market’s downturn reflects growing investor anxiety over both trade policy shifts and rising inflation expectations, signaling potential volatility in the near term.

Trump’s forthcoming announcement regarding reciprocal tariffs significantly fueled this uncertainty. During a summit with Japanese Prime Minister Shigeru Ishiba, Trump emphasized that tariffs remain a key tool to address trade imbalances, stating that a comprehensive plan targeting multiple countries will be unveiled next week. This comes after his previous imposition of a 10% additional tariff on Chinese goods and a temporary 25% tariff on imports from Canada and Mexico, which had been deferred for one month. Trump has also hinted at potential tariffs on European Union (EU) products, further stoking fears of an escalating global trade conflict.

Adding to market pressures was the release of January’s unemployment data, which showed a slight decrease from 4.1% to 4.0%. While this typically signals a robust labor market, it paradoxically spurred concerns about potential interest rate hikes, as stronger employment figures often lead to higher bond yields. Indeed, the increase in bond yields exerted downward pressure on equities, as investors reassessed the risk-reward balance in the face of tighter monetary conditions.

Furthermore, the University of Michigan’s February consumer sentiment survey revealed a concerning rise in inflation expectations. The survey indicated that consumers anticipate a 4.3% inflation rate over the next year, up 1.0 percentage point from the previous month. This jump reflects mounting worries about sustained price increases, which could erode purchasing power and dampen economic growth.

Major technology stocks were particularly vulnerable to the day’s negative sentiment. Amazon shares plunged 4.1% after the company’s Q1 earnings forecast fell short of market expectations. Alphabet, Google’s parent company, also saw a 3.2% decline, extending losses triggered by disappointing earnings results. The broader tech sector suffered as investors retreated from high-growth stocks amid concerns over profitability and macroeconomic headwinds.

Electric vehicle (EV) manufacturers faced steep declines as well. Tesla’s stock dropped sharply by 3.39%, closing at $361.62. Other EV makers like Rivian and Lucid also experienced losses exceeding 2%. The most dramatic fall was seen with Nikola Corporation, which plummeted over 41% to just $0.44 per share amid ongoing bankruptcy fears. This stark decline underscores the fragile state of emerging EV companies grappling with financial instability and fierce market competition.

In summary, the combination of Trump’s aggressive trade policy stance and persistent inflation fears created a perfect storm for U.S. markets. The declines in major indexes, alongside the sharp sell-off in technology and EV stocks, reflect deepening investor unease. As markets brace for the formal announcement of reciprocal tariffs and monitor inflation trends, heightened volatility is likely to persist in the coming weeks. Investors will need to navigate these challenges carefully, balancing short-term risks with long-term growth opportunities in an increasingly uncertain economic landscape.