Stocks declined, gold appreciated, and volatility surged on Monday, as ambiguity surrounding President Donald Trump’s intended tariffs and jitters regarding artificial intelligence weighed heavily on Wall Street.
The Dow concluded the session down 823 points, marking a 1.66% drop, representing its worst day in a month. The broader S&P 500 index fell by 1.04%, while the tech-heavy Nasdaq Composite experienced a 1.13% retreat.
Following the Supreme Court’s Friday ruling invalidating tariffs imposed by Trump utilizing emergency powers, the President announced over the weekend his intention to escalate these duties to a new level—15% on U.S. imports—through alternative legal authority.
The renewed focus on tariffs, coupled with confusion regarding potential refunds, muddies the outlook for equities. Wall Street’s fear barometer, the VIX, jumped 12% on Monday, crossing above the 20-point threshold, which typically signals heightened market turbulence.
“The tug-of-war over tariffs will likely be a distracting theme for markets for the remainder of the year, albeit with less acute volatility than the initial shock experienced last April,” noted Michael Landsberg, CIO at Landsberg Bennett Private Wealth Management, in a memorandum.
As investors contend with these evolving tariff statements, Wall Street is simultaneously grappling with persistent weakness in technology and AI stocks. The technology-focused Nasdaq has retreated by approximately 5.8% since hitting its all-time high late last October.
Concerns over potential AI disruptions continue to exert downward pressure on the markets. Citrini Research published a report on Substack on Sunday outlining hypothetical scenarios detailing how AI advancements might disrupt specific sectors of the economy. Stocks cited in that report saw declines on Monday.
American Express (AXP) shares plummeted by 7.2%, ending the day at their lowest point since April. DoorDash (DASH) and private equity firm KKR (KKR), two other companies mentioned in the publication, saw their stock prices fall by 6.6% and 8.89%, respectively.
Furthermore, IBM (IBM) stock dropped by 13.15%, enduring its worst trading day since the year 2000, following a blog post by Anthropic describing how their AI tool, Claude, could facilitate overcoming the cost barrier associated with upgrading the widely used COBOL (Common Business-Oriented Language) programming language.
Over 60% of the S&P 500 components finished the day in negative territory on Monday. Although stocks managed a slight gain on Friday, sentiment soured over the weekend as Trump indicated raising the newly proposed tariff from 10% to 15%.
Gold, traditionally viewed as a safe haven during uncertainty, increased by 3.4%, pushing its price above $5,200 per troy ounce. “Fear” appears to be the prevailing sentiment driving markets, according to the CNN Fear and Greed Index.
Lingering worries about private credit, alongside geopolitical tensions between the US and Iran, further amplified market anxiety, according to Matt Maley, Chief Market Strategist at Miller Tabak + Co.
“With so much uncertainty cresting simultaneously, it is hardly surprising that equities are showing weakness,” Maley stated via email correspondence.
Bitcoin fell more than 4% over the past 24 hours, hovering around $64,600. The cryptocurrency continues its bearish trend this year, having now dropped nearly 50% from its record high above $126,000 in early October.
The U.S. Dollar weakened slightly concerning other major currencies. Treasury yields declined as investors began favoring bonds.
“The crucial question for the markets is not just the final tariff level, but rather the unpredictability of what comes next,” commented Daniela Hathorn, Senior Market Analyst at Capital.com, in her analysis.
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