Market Recap: Monday March 3, 2025
Stocks Sell Off as Trump Tariff Uncertainty Weighs on Markets
US equities ended sharply lower on Monday, with the S&P 500 (-1.76%) posting its worst day since early Januaryand the Nasdaq (-2.64%) extending losses from Friday’s selloff - its biggest weekly drop since September. The Dow (-1.48%) and Russell 2000 (-2.81%) also declined, as broad-based weakness gripped the market. Big tech, particularly NVIDIA (NVDA), led the declines, with additional pressure from energy, semiconductors, homebuilders, and financials. Defensive sectors such as consumer staples, life insurance, REITs, and pharma outperformed, while gold surged (+1.9%) as a safe-haven play. Bitcoin tumbled 7.5%, reversing gains from Trump’s weekend crypto-related announcement. Oil fell 2% after OPEC+ confirmed plans to increase April output.
Trump’s Tariff Implementation Sparks Risk-Off Sentiment
Tariff concerns remained at the center of market anxiety after Trump confirmed that 25% tariffs on Canada and Mexico will take effect tomorrow (March 4), with additional tariffs on China (10%) also set to begin. Agricultural tariffs and reciprocal trade levies are scheduled for April 2, while new tariffs on lumber imports are being investigated. While investors had speculated that some tariff relief was possible, Monday’s confirmation added to concerns that these measures could hurt corporate margins and global trade flows. Trump’s rhetoric suggested little room for negotiation, driving further market jitters.
ISM Manufacturing Data Highlights Growth Risks
The February ISM Manufacturing Index dropped to 50.3 (vs. 50.5 expected, prior 50.9), reflecting softer demand and growing cost pressures. The New Orders Index fell back into contraction territory (48.6 vs. prior 55.1),signaling slowing momentum in manufacturing activity. The Prices Paid Index jumped to 62.4, raising concerns over inflation persistence as companies pass on higher costs due to tariffs. Meanwhile, the Atlanta Fed GDPNow estimate for Q1 was revised down to -2.8%, reinforcing fears of a slowdown.
Nvidia Extends Selloff Amid China Export Concerns
Nvidia (NVDA -8.8%) continued its post-earnings decline, bringing its five-day loss to over 16%. Despite strong Q4 results, concerns are mounting over potential new US restrictions on AI chip exports to China. Mizuho analysts flagged that further restrictions could cut $4–5B from Nvidia’s FY26 revenue estimates. Reports also surfaced that China is circumventing US export controls to acquire advanced Nvidia chips, raising the risk of even harsher trade restrictions from Washington.
Notable Gainers and Decliners
Gainers: Allegro MicroSystems (ALGM +14.9%) surged on takeover interest from ON Semiconductor. Capri Holdings (CPRI +3.9%) rose on reports that Prada is nearing a $1.6B deal to acquire Versace. Applovin (APP +3.6%) advanced after announcing a modified share buyback program with an immediate $500M repurchase.
Decliners: Sunnova Energy (NOVA -64.3%) collapsed after warning that existing cash and financing agreements are insufficient to meet obligations. Fortrea Holdings (FTRE -25.1%) plunged after missing earnings estimates and issuing a weak 2025 outlook. Nvidia (NVDA -8.8%) extended its post-earnings slide on concerns over stricter US export controls on AI chips.
Here’s Our Take
Monday’s sharp equity decline highlights the market’s sensitivity to trade policy uncertainty, growth concerns, and momentum-driven positioning. With tariffs on track for immediate implementation, investors should monitor potential retaliatory measures and any signs of economic fallout in key sectors like semiconductors, autos, and industrials.
For long-term investors, heightened volatility could create buying opportunities in high-quality tech stocks like Nvidia, but short-term risks remain elevated. Defensive sectors like consumer staples, healthcare, and gold may continue to outperform in an uncertain macro environment. Additionally, AI-driven semiconductor plays face regulatory risks, making diversification across the broader tech landscape a prudent strategy.