Trump's tariffs on Canada and Mexico lead to market plunge... Nvidia drops over 8% [New York Stock Market Briefing]

Nasdaq plunges 2.64%

Major indices on the New York stock market plummeted. This is interpreted as a direct hit from US President Donald Trump's announcement of '25% tariffs on Mexico and Canada effective March 4.'

On March 3 (local time), the Dow Jones Industrial Average closed at 43,191.24, down 649.67 points (-1.48%) from the previous day. The Standard & Poor's (S&P) 500 index closed at 5,849.72, down 104.78 points (-1.76%) from the previous day, while the tech-heavy Nasdaq index finished at 18,350.19, down 497.09 points (-2.64%) from the previous day.

Seo Sang-young, a researcher at Mirae Asset Securities, said, "The US market started higher but then turned downward after economic indicators were released and tariff issues were reflected. As time passed, Nvidia's decline widened and the weakness in AI-related stocks intensified, which burdened the market," adding, "As Trump mentioned reciprocal tariffs before the market close, related anxieties grew and the decline expanded."

President Trump's decision to impose 25% tariffs on the two major parties of the United States-Mexico-Canada Agreement (USMCA), one of the major pillars of global trade, has shaken the US stock market.

The three major New York stock indices briefly showed an upward curve early in the session. However, they fell sharply after President Trump mentioned in the afternoon that "25% tariffs on imports from Mexico and Canada will begin to be imposed on Tuesday (the 4th)."

Meanwhile, the Institute for Supply Management (ISM) announced that the Manufacturing Purchasing Managers' Index (PMI) for February recorded 50.3. This is 0.6 points lower than the previous month (50.9) and below market expectations.

Timothy Fiore, chair of the ISM, analyzed, "Demand decreased, production stabilized, and workforce reductions continued. This is because companies responding to the survey are experiencing the first operational shock from the new administration's tariff policies."

He assessed, "As tariffs accelerated price increases, new order backlogs, supplier delivery disruptions, and manufacturing inventories were affected," adding, "Although tariffs won't officially take effect until mid-March, key raw material prices have already risen by about 20%."

In the overnight market, amid Trump's tough policies, all major tech companies were hit hard.

Nvidia recorded the largest drop among the 'Magnificent 7' major tech companies with a decline of -8.69%. With this sharp drop, Nvidia's market capitalization fell below $3 trillion again.

Amazon fell more than 3%, while Microsoft, Alphabet, Tesla, and Apple dropped around 2%.

The Philadelphia Semiconductor Index saw 29 of its 30 component stocks decline.

TSMC announced at the White House that it would invest at least $165 billion in the US and build five new semiconductor factories, but its stock price fell 4.19%.

Artificial intelligence (AI) and semiconductor-related stocks all saw weakened investor sentiment. Broadcom fell more than 6%, and Arm plunged over 8%.

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com