Stocks Drop As Trade War Escalates: What's Driving Markets Tuesday?

U.S. stocks plunged Tuesday as President Donald Trump‘s tariffs on key trade partners came into effect, prompting retaliatory measures and intensifying global trade tensions.

The Dow Jones Industrial Average fell 1.8%, extending Monday’s sharp decline of nearly 650 points and heading towards its worst performance of 2025. The S&P 500 decreased by 1.7%, while the Nasdaq Composite dropped 1.9%, putting it on course to enter correction territory, defined as a 10% drop from its recent peak. 

Read More: Trump Tariffs Will Raise Prices ‘Within Days,’ Target CEO Says

Affected countries announced retaliatory measures, further dampening investor sentiment.

China announced retaliatory tariffs of up to 15% on certain U.S. products, including chicken, wheat, corn, and cotton. Canadian Prime Minister Justin Trudeau declared that Canada would impose a 25% tariff on U.S. goods. Mexican President Claudia Sheinbaum stated that Mexico would respond with tariffs and other measures, to be announced on Sunday.

The yield on the US 10-year Treasury note fell to 4.13% on Tuesday, its lowest level since October 2024. Markets are now pricing in three quarter-point rate cuts by the Federal Reserve in 2025, according to data from CME FedWatch. The iShares 20+ Year Treasury Bond ETF TLT slipped 0.58%. 

Natural gas futures rose more than 8% on Tuesday, above $4.45/MMBtu, the highest since December 2022. Stockpiles remain below the five-year average due to earlier extreme cold in the U.S. while LNG export flows have reached record levels. The United States Natural Gas Fund LP UNG ETF climbed 8.5%. 

Bitcoin BTC/USD continued Monday's decline to trade below the $84,000 mark, leading crypto markets lower. 

Tuesday’s Performance In Major U.S. Indices, ETFs

Major Indices	Price	1 day % chg.
Nasdaq 100	18,175.89	-0.99%
S&P 500	5,772.73	-1.32%
Dow Jones	42,535.92	-1.52%
Russell 2000	2,064.42	-1.81%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY was down 1.24% to $576.36.
• The SPDR Dow Jones Industrial Average DIA was down 1.45% at $425.81. 
• The tech-heavy Invesco QQQ Trust Series QQQ fell 0.8% to $493.08. 
• The iShares Russell 2000 ETF IWM slid 1.1% to $205.00.
• The Consumer Discretionary Select Sector SPDR Fund XLY was down 2.17% to $207.38. 
• The Energy Select Sector SPDR Fund XLE was down 1.06% to $86.87. 

Tuesday's Stock Movers: 

Shares of Okta, Inc. OKTA, bucked the market trend, surging 18% after the company reported better-than-expected financial results on Monday.

Stocks reacting to company earnings reports included: 

• Target Corp. TGT 
• Best Buy Co., Inc. BBY 
• B. Riley Financial, Inc.RILY 
• Okta, Inc. OKTA 
• NuScale Power Corp. SMR 
• GitLab Inc. GTLB 
• Curaleaf Hldgs Inc. CURLF 
• Dave Inc. DAVE 
• Emergent BioSolutions Inc.  EBS 
• AST SpaceMobile, Inc. ASTS 
• Concentra Group Holdings Parent, Inc. CON 

Companies reporting after Tuesday's closing bell include: 

• ChargePoint Holdings, Inc. CHPT
• Ross Stores, Inc. ROST
• Rigel Pharmaceuticals, Inc. RIGL
• CrowdStrike Holdings, Inc. CRWD
• Box, Inc. BOX
• Sociedad Quimica y Minera S.A. SQM
• AeroVironment, Inc. AVAV
• Stem, Inc. STEM

Read Next: 

• Markets Tank After Trump Confirms More Tariffs: Here’s What Wall Street Is Saying

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