S&P 500, Nasdaq tank led by sell-off in tech shares, Trump auto tariffs

US markets on Wall Street tanked on Wednesday as tariff uncertainties loomed large with President Donald Trump announcing a 25% tariff on all auto imports starting April 2, along with a sell-off in shares of big tech companies.

The Dow Jones ended 130 points lower but fell 400 points from the highs of the day. The S&P 500 declined 1.1%, while the Nasdaq shed 2% led by a drop in 6% drop in Nvidia, a 5% fall in Tesla and a drop of over 2% in shares of Meta, Amazon and Alphabet.

The quarterly losses in the group of “Magnificent Seven” is set to be the worst since 2022.

Shares of General Motors and Stellantis fell 3% in regular trading after Donald Trump’s auto tariff announcement. Shares of the former are down 8% in after-market trading as well. The tariff announcement also impacted a $589 billion ETF tracking the S&P 500.

Federal Reserve Bank of St. Louis President Alberto Musalem said it’s not clear any inflationary impact from tariffs will prove temporary, and cautioned that secondary effects could prompt officials to hold rates steady for longer.

“Uncertainty on the tariff front remains ridiculously high, leaving it incredibly tough for businesses or consumers to plan more than about a day into the future, and still making it nigh-on impossible for market participants to price risk,” said Michael Brown, a strategist at Pepperstone.

The yield on 10-year Treasuries advanced three basis points to 4.35%. The dollar gained 0.3%.

“Today was a reminder that despite the recent rebound in stocks, volatility remains as policy uncertainty lingers,” said Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.

Moreover, Skelly says next week’s tariff deadline will likely be more of a starting point for negotiations than a conclusion, so the market may struggle to recover in a straight line higher.

Tariffs and weakening survey data are set to weigh on the US stock market for the rest of the year, according to Barclays Plc strategists led by Venu Krishna, who cut their 2025 S&P 500 price target to 5,900 from 6,600.

Worries over the economic effects of the global trade war are sapping liquidity in US stocks, creating a headache for institutional investors that could also boost volatility in broader markets.

Liquidity in S&P 500 stock-index futures, as measured in the most-active contract, stands at a two-year low, data compiled by Deutsche Bank AG show.

“We remain cautious over the near term and continue to look for confirmation that a bottom has been firmly put in place,” said Dan Wantrobski at Janney Montgomery Scott.

(With Inputs From Agencies.)