Stocks dropped sharply on Monday after President Trump reaffirmed tariffs on imports from Canada and Mexico, causing a 1.8% decline in the S&P 500, the biggest drop this year. The Nasdaq fell 2.6%, nearing correction territory. These tariffs raised fears of inflation and prolonged elevated interest rates from the Federal Reserve, threatening economic stability. The Russell 2000 index dropped 3.1%, reflecting deeper economic concerns, while the Vix volatility index showed increased market uncertainty following Trump's announcement amid weakening consumer sentiment.
The S&P 500 fell 1.8 percent, its biggest daily drop this year, following President Trump's announcement to impose broad tariffs on Canada and Mexico.
Investors fear that the tariffs will raise prices in the United States, leading the Federal Reserve to maintain elevated interest rates and risk economic downturn.
The afternoon slump followed Trump's assertion regarding 25 percent tariffs on key trading partners, intensifying concerns about corporate profits and inflation.
The Russell 2000 index fell 3.1 percent, pushing further into its own correction, down more than 14 percent since its peak in late November.
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