The US markets ended in red, amid concerns about a global trade war after President Donald Trump's new tariffs on imports from Canada, Mexico and China took effect. While some traders used the weakness as an opportunity to pick up stocks at reduced levels, but buying interest evaporated in the final hour of trading. Traders took note of White House stating that Trump is proceeding with implementing previously paused 25 percent tariffs on Canada and Mexico to combat the extraordinary threat to U.S. national security posed by unchecked drug trafficking. Trump also increased the tariff on Chinese imports to 20 percent from 10 percent, claiming the country has not taken adequate steps to alleviate the illicit drug crisis. Traders were cautious with Canada responded by announcing 25 percent retaliatory tariffs on C$155 billion of American goods, starting with tariffs on C$30 billion worth of goods immediately and tariffs on the remaining C$125 billion in 21 days' time. Meanwhile, Mexican President Claudia Sheinbaum said her government has made ‘contingency plans’ to respond to the new tariffs. China also said it would impose additional tariffs of 10 to 15 percent on several agricultural goods, including soybeans, corn, dairy and beef.
On sectorial front, banking stocks turned in some of the market's worst performances on the day, with the KBW Bank Index plunging by 4.6 percent to its lowest closing level in almost two months. Substantial weakness was also visible among airline stocks, as reflected by the 3.9 percent nosedive by the NYSE Arca Airline Index. The index plummeted to a more than four-month closing low. Brokerage stocks also showed a significant move to the downside, dragging the NYSE Arca Broker/Dealer Index down by 3.4 percent.
Dow Jones Industrial Average decreased 670.25 points or 1.55 percent to 42,520.99, S&P 500 was down by 71.57 points or 1.22 percent to 5,778.15 and Nasdaq decreased 65.03 points or 0.35 percent to 18,285.16.
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