US stock markets experienced a sharp decline, with the S&P 500 falling by 1.75%. The Nasdaq Composite dropped by 2.6%, while the Russell 2000 saw a 2.8% decrease.
The DJIA closed down by 1.4%, and the Toronto TSX Composite fell by 1.5%. Despite a last-minute buying surge following Trump’s tariff order increase on China from 10% to 20%, tech stocks and small caps were particularly affected. Currently, the Nasdaq is trading below its level from election night.
Market Selloff Intensifies
Markets have been hit hard, and the selloff is showing no immediate signs of stopping. The latest declines follow a period of relative stability, making the abrupt reversal even more striking. Weakness in technology and smaller companies suggests that investors are pulling back from riskier assets, while the late-session bounce points to active efforts by short-term traders to reposition.
Trump’s decision to raise tariffs on Chinese imports has only added to the pressure. The higher levy—jumping from 10% to 20%—was met with selling across sectors, though technology and smaller companies bore the brunt of the reaction. The Nasdaq Composite, having already been under stress, has now fallen beneath levels seen on election night. This underperformance suggests that investor optimism surrounding past policy benefits may be fading, replaced by concerns over trade and growth.
The Dow and the Toronto TSX Composite were also caught in the downturn. Both ended lower, though large-cap stocks showed relatively more resilience. That said, with the broader market facing mounting pressure, the ability of these indices to hold up will be tested further in the sessions ahead.
From a trading perspective, the current environment demands caution. Sharp intraday movements indicate fragility, with sentiment shifting quickly in response to policy headlines. Any attempt to gauge short-term direction requires an understanding that momentum can reverse at any moment. Those who are positioned aggressively should carefully reassess, particularly with the volatility seen after Trump’s decision.
Institutional Reaction And Market Outlook
The next few weeks are likely to be driven not just by global trade policy but also by how institutional money reacts to recent price action. If larger players continue reducing exposure to risk-sensitive sectors, further downside cannot be ruled out. Meanwhile, any attempts at recovery may be met with resistance unless accompanied by clear signs of stabilisation in either economic outlooks or external pressures.
At present, market behaviour suggests traders remain highly reactive, making it challenging to maintain a consistent outlook. The rapid swings seen recently are a reminder that conviction can shift quickly, leading to abrupt repositioning. Those navigating this period should remain aware of the potential for sudden market shifts, especially as external factors continue shaping sentiment.
