Midday: U.S. stocks extend losses, all three major indexes down over 1%

In the early hours of February 24 Beijing time, U.S. stocks extended their losses at midday on Monday, with all three major indices falling by more than 1%. The Dow dropped over 700 points. After the Supreme Court ruled his "reciprocal tariffs" policy unconstitutional, U.S. President Trump announced an increase in global tariff rates to 15%. This week, the market will also focus on Trump's State of the Union address regarding the Iran situation and Nvidia's upcoming earnings report.

The Dow fell 714.11 points, a decline of 1.44%, to 48,911.86; the Nasdaq dropped 265.37 points, or 1.16%, to 22,620.70; and the S&P 500 lost 69.16 points, or 1.00%, to 6,840.35.

Last Saturday, President Trump announced that the global tariff rate would be raised from 10% announced on Friday to 15%, claiming the new tariffs would take effect immediately, though the status of official documentation remains unclear.

Trump also warned of more punitive tariffs in the coming months. He posted on social media: "As President of the United States, I will immediately raise the 10% global tariff on multiple countries—countries that have been 'extorting' the U.S. for decades without punishment (until I took office!)—to the legally permitted and judicially reviewed level of 15%."

On Monday, Trump posted on Truth Social, stating, "As President, I do not need to seek Congressional approval for tariffs." He added, "Tariffs have existed in multiple forms for a long time," and "the Supreme Court's decision once again confirms this."

The new tariff policy has heightened market concerns about the U.S. inflation outlook and global economic growth, driving gold prices higher. Spot gold rose over 1%, while gold futures increased by 2%. Bitcoin continued its sharp sell-off, briefly falling below the $65,000 mark before rebounding above $66,000, but still down 1.7%.

European officials expressed concern over Trump's tariff stance, warning that the U.S.-Europe trade agreement could be at risk and demanding "full clarification" from the U.S. regarding Trump's latest tariff measures.

After President Trump raised global tariff rates to 15% last weekend, the trade agreement between the U.S. and Europe may be at risk. In a statement released Saturday, the European Commission said it expects further clarification from Washington and emphasized that trade commitments between the EU and the U.S. should be respected.

"The European Commission requests that the U.S. provide full clarification on the next steps following the recent Supreme Court decision on the International Emergency Economic Powers Act," the Commission stated, "The current situation is not conducive to achieving the 'fair, balanced, and reciprocal' transatlantic trade and investment as agreed in the August 2025 U.S.-EU joint statement."

Last Friday, after the Supreme Court struck down most of Trump's trade agenda, Wall Street experienced volatile trading. The major indices rose, fell, and then rebounded, with the Dow ultimately closing up more than 230 points (0.5%), the S&P 500 up 0.7%, and the Nasdaq Composite up 0.9%.

Investors hoped the Supreme Court's decision would ease tensions between the U.S. and its trading partners and help tariff-affected businesses seek tax refunds, but the White House has not yet clarified its policy on refunds.

Tim Holland, Chief Investment Officer at Orion Wealth Management, said, "It appears that Wall Street and the entire American business community will continue to grapple with trade and tariff issues for quite some time."

The Iran issue continues to affect market sentiment. Last week, Trump urged Iran to reach an agreement on its nuclear program, warning of "serious consequences" otherwise. Trump is set to deliver his State of the Union address to Congress this Tuesday.

This week's market focus also includes Nvidia's earnings report. The chip giant will announce its results on Wednesday. As one of only two rising stocks among the "Magnificent Seven" tech firms this year, it needs to prove to investors that its AI investment strategy is solid. On the economic data front, durable goods orders and factory orders will be released Monday morning.

Federal Reserve Governor Christopher Waller made no comments on the future direction of interest rates on Monday, stating he would weigh better-than-expected labor market data against inflation indicators expected to ease over the year.

After casting a dissenting vote when the Fed decided to pause the rate-cut cycle in January, Waller noted that employment data presents a complex picture. Although nonfarm payroll numbers exceeded expectations that month, he believes that given other indicators showing weak or flat job growth, the report may be "more noise than signal."

Waller said in his speech that he would continue to monitor subsequent data before the Fed's next rate decision at its March meeting. He believes the January employment report may simply be a temporary phenomenon in the near-stagnant 2025 employment growth trend, or a sign of an impending rebound.

"There is enough uncertainty in the January data that I need to see the February report to be released on March 6 before determining whether there is a rebound in the labor market," he said. "As I obtain more data, I will be able to clarify the current situation and thus make more prudent policy decisions."

He believes last Friday's Supreme Court decision ruling President Trump's "emergency" tariffs unconstitutional may not have much impact. Waller has long argued that the inflationary effect of tariffs would be temporary and thus would not be a policy consideration.

Waller made these remarks at the National Association for Business Economics meeting held in Washington, D.C.

Editor: Zhang Jun SF065