Key Points:
- Tariff Threats Spark Correction: S&P 500 down 10%, Dow drops 1,700 points in 28 hours due to U.S.-Canada trade tensions.
- Tech Giants Falter, Broadcom Rises: “Magnificent 7” lose $3.5 trillion; Broadcom gains on AI optimism.
- VIX Jumps: Volatility index hits 28, reflecting market unease.
Wall Street is reeling after President Trump and Canadian Prime Minister Mark Carney voiced more tariff threats, driving major indices into correction territory. The S&P 500 has officially entered a correction, now down 10% from its all-time high, while the Dow Jones Industrial Average has plummeted 1,700 points over the past 28 hours.
Here is a market update as of 2 PM (ET) today:
- S&P 500 is down 55.39 points (-1.00%)
- Nasdaq Composite is down 94.94 points (-.57%)
- Dow Jones Industrial Average is down 598.36 points (-1.43%)
Historically, corrections—defined as a decline of 10% or more—serve as natural market adjustments. However, the rapidity and magnitude of the current downturn have raised investor concerns. Notably, the Dow’s 1,700-point drop over 28 hours marks one of its steepest declines since the outset of Covid 19 in 2020.
The catalyst for this market turmoil stems from President Trump’s announcement of a 50% tariff on Canadian steel and aluminum imports, a significant escalation in trade tensions. In retaliation, Canada has threatened to cut electricity supplies to 1.5 million American households. Newly elected Canadian Prime Minister Mark Carney stated he would maintain tariffs on the U.S. until “Americans show us respect.”
Reshuffling of Big Tech
The “Magnificent 7″—Apple, Microsoft, Amazon, Alphabet (Google), Meta (Facebook), Nvidia, and Tesla—have collectively experienced a significant market capitalization decline of approximately $3.5 trillion since December 17, 2024. This substantial decrease has reduced their combined weight in the S&P 500 index from 34.4% to 30.4%.
Broadcom (AVGO) has been seeing its share of selling, down 18.40% in the past month, but the stock gained today on the heels of positive Wall Street analyst coverage. Analysts have noted that AVGO is experiencing an upward trend after being previously oversold. Citi analysts recently highlighted Broadcom as one of their top picks in the AI semiconductor space, citing expectations of a 13% annual growth in semiconductor sales, reaching $709.5 billion, fueled by AI demand.
In response to these positive developments, analysts have raised their price targets for Broadcom. Morgan Stanley increased its target to $260, maintaining an “Outperform” rating, while Truist raised its target to $267 with a reiterated “Buy” rating.
The VIX Index again moved higher today, now sitting at 28 points, well above the long-term average of 19.47. The VIX has a strong historical inverse relationship with the S&P 500. When the S&P 500 falls, the VIX typically rises, and vice versa. We are clearly in uncertain times and likely to see an elevated volatility until investors have a clearer picture on Trump’s tariff agenda.
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