U.S. stocks faced another sharp decline on Tuesday as President Donald Trump intensified his tariff threats against Canada. The Dow Jones Industrial Average fell 540 points, or 1.3%, in morning trading, compounding investor concerns following Monday's steep losses. Trump's announcement of potential new tariffs has rattled markets, with the Dow having already tumbled 890 points on Monday.
The latest market downturn comes after President Trump, in a Sunday interview with Fox News, refrained from dismissing the possibility of a recession. This uncertainty has added to investor anxiety, further fueled by Trump's tariff threats. He proposed a 25% tariff on Canadian electricity and a 50% tariff on all steel and aluminum imported from Canada.
Monday's selloff saw the S&P 500 shed 2.7%, while the Nasdaq Composite also experienced significant losses. By Tuesday, the S&P 500 fell another 1.1%, and the Nasdaq Composite dropped 0.8%, leaving the benchmark index veering close to correction territory.
Investor sentiment has been notably negative, with CNN's Fear and Greed Index indicating "extreme fear" as the driving force behind market behavior over the past two weeks. This prevailing fear has led to increased volatility, as markets respond to the president's alternating tariff announcements.
The Dow now stands 8.6% lower than its record high in February, illustrating the dramatic impact of recent economic uncertainties. As investors grapple with potential trade disruptions, the trajectory of U.S. stocks remains uncertain.