Stocks closed down across the board on Tuesday as markets capped off a volatile trading session spurred by President Trump’s back-and-forth tariff rhetoric.

The S&P 500 was able to avoid correction territory but still fell about 0.8% to trade at just under 5,600.

The Dow Jones Industrial Average (^DJI) shed roughly 500 points, or 1.1%, dragged down by shares of Verizon (VZ). The tech-heavy Nasdaq Composite (^IXIC) reversed gains in the last few minutes of trading to fall about 0.2%.

February’s Consumer Price Index (CPI) will serve as the latest test of whether an inflation resurgence is a risk to the US economy as investors debate if and when the Federal Reserve will cut interest rates in 2025.

The report, set for release at 8:30 a.m. ET on Wednesday, is expected to show price increases moderated during the second month of the year.

Headline annual inflation is forecast to come in at 2.9% in February, just below January’s 3% annual gain. On a month-over-month basis, prices are estimated to rise 0.3%, below the 0.5% increase seen in January.

On a “core” basis, which strips out the more volatile food and energy costs, CPI is expected to have risen 3.2% over the past year in February, a touch below January’s 3.3% increase. Monthly core price increases are anticipated to rise 0.3%, below January’s 0.4% rise.

In a speech last week, Federal Reserve Chair Jerome Powell warned inflation pressures would likely persist, even if Wednesday’s report comes in as expected: “The path to sustainably returning inflation to our target has been bumpy, and we expect that to continue.”

Read more here.

The White House is attempting to assuage fears over a possible US recession as stocks continue their recent plunge to the downside.

“When it comes to the stock market, the numbers that we see today, the numbers we saw yesterday, the numbers we’ll see tomorrow are a snapshot of the moment in time,” White House press secretary Karoline Leavitt told reporters on Tuesday.

“As President Trump has said, and I’m here to echo the remarks of this president and of this White House, we are in a period of economic transition,” she continued. “We are in a period of transition from the mess that was created under Joe Biden and the previous administration. Joe Biden left this country in an economic disaster.”

Stocks sold off on Tuesday, extending the declines seen in the previous session as the benchmark S&P 500 flirted with correction territory and the Dow dropped over 400 points.

The S&P 500 (^GSPC) is on track to close in correction territory after falling around 1.5% in afternoon trading on Tuesday to hover at just around 5,530.

The benchmark index extended Monday’s declines as recession fears continued to spook markets.

In recent weeks, economic forecasting teams from Morgan Stanley, Goldman Sachs, and others have moved their 2025 GDP projections lower; Morgan Stanley now forecasts 1.5% growth in 2025, and Goldman sees 1.7%.

Amid those growth concerns, the one trade that had consistently dominated the two-year bull market has rapidly unwound: the megacap “Magnificent Seven.”

“A regime change is taking place in the markets and what used to work is not going to work from here anywhere to the same degree,” economist Peter Boockvar wrote in a note on Tuesday. “The stock market has a history of handing the baton over to other things and now seems to be one of those times.”

“It’s easy to blame the tariffs and scattershot approach being employed for the decline in the stock market but it’s broader than that,” Boockvar argued. “You lose the special 7 stocks, which at its peak made up about 35% of the S&P 500, you are without a net in the broader market unless the baton is immediately passed to someone else.”

But with stocks plummeting, it’s currently unclear which companies or sectors even have the capacity to finish the race.

Delta (DAL) shares extended declines on Tuesday, falling another 9% after the company cut its outlook for the current quarter. The airliner cited a dip in consumer and corporate confidence and softening domestic demand amid “macro uncertainty.”

Earlier on Tuesday, United Airlines (UAL) also slashed its forecast, saying it similarly expects travel demand weakness amid a recent slowdown in US consumer spending.

The developments come as Trump doubles down on his trade war with Mexico and Canada and escalates his tariff fight against China. Compared to the other US-based airliners, United has the highest exposure to China.

“While we continue to remain constructive on the supply backdrop — which we still believe is favorable — our attention has shifted to what appears to be an emerging economic ‘soft patch,’” Deutsche Bank strategists wrote in a note Tuesday. “To what extent and duration are not clear at the present, however, we do think it will likely weigh on demand for air travel, particularly the domestic discretionary segment.”

Meanwhile, Southwest Airlines (LUV) said Tuesday it would end its longstanding free checked bag policy.

“We have tremendous opportunity to meet current and future customer needs, attract new customer segments we don’t compete for today, and return to the levels of profitability that both we and our shareholders expect,” Southwest Airlines CEO Bob Jordan said in a press release.

It’s not just the “Magnificent Seven” stocks feeling the impact of recent sell-off action.

Highfliers like Netflix (NFLX), AMD (AMD), Micron (MU), Dell (DELL), and Palantir (PLTR), among others, have also been washed out in the midst of this latest market rout.

Netflix stock has declined over 10% from a month ago, and some on Wall Street are warning that its recent volatility signals a more sinister picture of the current stock market.

“When NFLX goes down over 9% in one day, that tells me we are starting to see some panic,” Mizuho analyst Jordan Klein wrote in a note to clients on Friday.

Klein added that although some analysts have recently called out Netflix’s heavy content spend and possible engagement headwinds, the company still has “zero tariff risk, pricing power and almost feels recession-proof.”

Therefore, a significant one-day drop in the stock “tells you that folks just want to reduce all exposure to equities right now,” he said.

Other non-Mag 7 players have underscored this sentiment since a month ago. AMD and Micron are down around 13% and 6%, respectively. Shares of Palantir, a previous momentum play on Wall Street, have plunged 30%. And Dell stock has tumbled roughly 20% over the same time period.

More Wall Street strategists are souring on US stocks on the heels of recent sell-off action.

On Tuesday, Citigroup strategists downgraded their view on US stocks to Neutral from Overweight, citing bearish signals such as expected negative US data prints and uncertainty over tariffs and government job cuts.

“We had not fully implemented our view that US exceptionalism is at least pausing, but this has now become clearer,” Citi said. The group also upgraded China stocks to Overweight but left equities overall Neutral.

“In the big picture, US equity outperformance may well return when the AI narrative takes over again, but in the coming months, we expect US growth momentum to undershoot the [rest of the world].”

Citi is not the only firm that downgraded US equities in favor of more global trades. For other Wall Street watchers, European stocks have also been on a recent hot streak.

“Prior to the US elections, we assumed that a Trump victory would reinforce US exceptionalism,” HSBC global equity strategist Alastair Pinder wrote on Monday.

“Today, we are upgrading Europe (ex-UK) to overweight (from underweight) and downgrading the US to neutral.”

Read more on the sentiment shift away from US markets here.

President Donald Trump on Tuesday said he’s boosting Canadian steel and aluminum tariffs to 50%, with the new duties set to go into effect on Wednesday.

In a post on Truth Social, the president said the increase is in response to Ontario Premier Doug Ford’s decision to impose a 25% surcharge on electricity exports to the United States.

“Based on Ontario, Canada, placing a 25% Tariff on ‘Electricity’ coming into the United States, I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD,” Trump wrote.

Stocks erased earlier gains following Trump’s post, with the Nasdaq falling from session highs to trade just around the flatline.

The Dow fell nearly 1% while the S&P 500 dropped around 0.4%.

In addition to these tariffs, Trump also threatened to “substantially increase” tariffs on cars coming into the US from Canada, adding these tariffs, “will, essentially, permanently shut down the automobile manufacturing business in Canada. Those cars can easily be made in the USA!”

Labor market data released Tuesday was largely in line with Wall Street’s expectations as investors watch closely for any further signs of cracks forming in the US economy.

New data from the Bureau of Labor Statistics released Tuesday showed there were 7.74 million jobs open at the end of January, an increase from the 7.51 million seen in December.

The December figure was revised lower than the 7.6 million open jobs initially reported, mamarking the largest sequential drop seen across the data in over a year. Economists surveyed by Bloomberg had expected Tuesday’s report to show 7.6 million openings in January.

The Job Openings and Labor Turnover Survey (JOLTS) also showed 5.39 million hires were made during the month, up slightly from the 5.37 million made during December. The hiring rate held flat at 3.4%.

Tuesday’s report also showed the quits rate, a sign of confidence among workers, rose to 2.1% up from the 1.9% seen the two months prior.

US stocks opened lower on Tuesday, extending the prior session’s brutal sell-off as fears escalated over the health of the US economy.

The Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) each fell around 0.2%, losing hold of small gains earlier in premarket trading. The tech-heavy Nasdaq Composite (^IXIC) dropped about 0.1% after logging its worst daily loss since 2022.

An early trend to call out as we get ready for earnings season in a few weeks: the DOGE impact on corporate America.

Southwest (LUV) mentioned “less government travel” in its sales warning today. Delta (DAL) CEO Ed Bastian slightly hinted at an impact in a TV interview following its own sales warning late on Monday.

HPE (HPE) CEO Antonio Neri tells me he is monitoring the potential impact of DOGE — which for his company would come in the form of fewer server orders.

Economic data: NFIB small business optimism (February); Labor Department Job Openings and Labor Turnover Survey (January)

Earnings: Casey’s (CASY), Dick’s Sporting Goods (DKS), Kohl’s (KSS)

Here are some of the biggest stories you may have missed overnight and early this morning:

Tesla’s next comeback story starts today

Citi downgrades US stocks, ups China as ‘America First’ fades

Wall Street stock forecasts are falling apart for 1 simple reason

Trump says he will buy a ‘new Tesla’ to show support for Musk

Meta begins testing its first in-house AI training chip

Delta cuts outlook on ‘macro uncertainty’, stock sinks

US airline stocks tumble as Delta’s forecast cut spooks investors

Gold (GC=F) rose past $2,900 an ounce as Wall Street’s sell-off eased, though investor concerns over the US economy persisted.

Bloomberg News reports:

Bullion pushed higher following a small drop on Monday, when President Donald Trump’s signals that the economy could first suffer as he reshapes trade policy with tariffs stoked concerns about a potential recession. The metal — a traditional haven asset — can face selling pressure during sudden market sell-offs.

Gold has advanced 11% this year, hitting successive records. The rally has been driven by fears about the disruption caused by the Trump administration, central-bank buying, and speculation the Federal Reserve may cut interest rates further. Lower borrowing costs tend to benefit non-yielding gold.

Read more here

President Donald Trump has taken a different approach to the stock market during his second term in office.

Namely: he appears to have outsourced the responsibility.

And after a sharp sell-off across the stock market on Monday saw post-election gains across the major indexes and several key tech stocks that have powered the market wiped out, it was not the president, but rather the vice president that appeared to do the talking to investors.

In a post on X, the social media platform owned by Elon Musk, a key member of Trump’s administration, Vice President JD Vance said companies that build in the US will be rewarded; for companies building outside the US, “you’re on your own.”

Last week, the president said, “I’m not even looking at the market” as the rollout of his tariff policy shook investor confidence.

Unlike his first term in office, Trump has also not spoken explicitly about the Federal Reserve and his view on policy. (Last time around, Trump repeatedly called for lower rates.)

Instead, Treasury Secretary Scott Bessent has repeatedly expressed a view that Treasury yields should be lower amid Trump’s push to clean up the federal budget and rein in spending across the government.

Given the speed and depth of the market’s sell-off since hitting record highs on Feb. 19, however, we’ll see how long the president can hold this new line.