Wall Street closed sharply lower on Monday, pulled down by tech and discretionary stocks. Investor mood was grim on the Trump administration announcing hefty tariffs on Japan, South Korea and other countries. All three benchmark indexes closed in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.9%, or 422.17 points, to close at 44,406.36. Twenty-five components of the 30-stock index ended in negative territory, while five ended in positive.
The tech-heavy Nasdaq Composite lost 188.59 points, or 0.9%, to close at 20,412.52.
The S&P 500 slid 49.37 points, or 0.8%, to close at 6,229.98. Ten of the 11 broad sectors of the benchmark index closed in the red. The Consumer Discretionary Select Sector SPDR (XLY), the Energy Select Sector SPDR (XLE) and the Communication Services Select Sector SPDR (XLC) declined 1.3%, 1% and 1%, respectively, while the Utilities Select Sector SPDR (XLU) added 0.2%.
The fear-gauge CBOE Volatility Index (VIX) increased 1.8% to 17.79. A total of 16.5 billion shares were traded on Monday, lower than the last 20-session average of 18.2 billion. Decliners outnumbered advancers by a 3.44-to-1 ratio on the NYSE and by a 2.74-to-1 ratio on the Nasdaq.
Trump Tariffs Weigh on the Markets
On Monday, U.S. markets reacted negatively to President Trump’s announcement of sweeping new tariffs. He sent letters to the leaders of 14 countries, including Japan, South Korea, Malaysia, Kazakhstan and BRICS members, threatening 25-40% import duties effective Aug. 1 and hinting at an extra 10% levy on BRICS nations. The sudden escalation in trade tensions rattled investors, prompting a broad sell-off across sectors.
Small-caps underperformed, with the Russell 2000 dropping around 1.5%. Risk-off sentiment was fueled by renewed uncertainty around global trade. Although markets had rallied earlier this summer, the tariff news dimmed sentiment, pulling back gains and reinforcing concerns that trade friction might derail economic growth. Investors are now closely watching whether follow-through negotiations before the Aug. 1 effective date can alleviate global trade fears.
Consequently, shares of Apple Inc. AAPL and Oracle Corporation ORCL fell 1.7% and 2.1%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Tesla Shares Plunge on Elon Musk’s Political Gambit
Tesla, Inc.’s TSLA shares plunged about 6.8% on Monday, largely due to Elon Musk’s announcement that he was forming a new political party, dubbed the "America Party". This reignited investor fears that he would be distracted from running Tesla effectively. The stock slide marked Tesla’s worst single-day performance since June 5, as the political move intensified tensions between Musk and President Trump and raised broader concerns about leadership focus at a time when the EV maker is already grappling with falling deliveries.
That drop contributed to market-wide unease triggered by newly announced tariffs. Analysts say the convergence of heightened trade uncertainty and Musk steering into political territory unsettled investors, particularly as Tesla was under pressure to ramp up production and maintain its competitive edge.
No economic data was released on Monday.
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Apple Inc. (AAPL): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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