Nvidia or Trump’s tariffs? Who’s to blame for the S&P 500’s tumble into the red for 2025?
Let’s look at the market scoreboard.
After the close on Wednesday, Nvidia released a set of quarterly results that, while impressive on the surface, failed to wow traders.
Ahead of the market open on Thursday, President Donald Trump recommitted to 25% tariffs on imports from Canada and Mexico, as well as a 10% levy on Chinese imports effective March 4.
Which bears more blame for the S&P 500’s 1.6% drop, which erased its gains for the year?
Well, let’s turn to the market scoreboard.
A basket of stocks selected by Goldman Sachs as being particularly vulnerable to potential Trump tariffs fell 2% on the day. That’s bad! The Nasdaq 100, however, was worse, with a 2.8% decline.
If we go back to the start of last September (an arbitrary line for beginning to price in potential impacts of a Trump presidency), this day ranks in the 77th percentile for how this cohort performed compared to the Magnificent 7. That is to say, in only about 23% of sessions did tariff-exposed stocks outperform the tech giants by more than they did on Thursday. For tariff-vulnerable stocks versus the Nasdaq 100, this was a 75th percentile day over the same time frame.
Tariff-sensitive stocks suffered a larger decline last Friday than they did on Thursday, whereas this was far and away the Nasdaq 100’s worst session since the DeepSeek-induced plunge.
Zooming out, since September, Goldman’s basket of tariff-exposed stocks is up modestly, while a basket of stocks judged to be well insulated from trade barriers is down nearly 5%.
(The same performance gap holds true if we’re just looking since Election Day, too!)
There is not strong evidence to suggest that tariffs have been a big driver of price action in general, and on Thursday in particular.
If the stock market is in the process of “waking up” to the threat of tariffs, Thursday was more akin to groggily hitting the snooze button. Again.
Don’t overthink it: when a ̶$̶3̶ $2.93 trillion chip designer tumbles after reporting earnings and the rest of the sector goes with it, Occam’s Razor applies.
An appropriate diagnosis of what’s happening in the here and now — particularly during a market drawdown — is important because it offers a lens into what can or might happen next, and what kind of catalysts investors should look out for that might change the character of the tape.
If the phrase “growth scare” is coming up more and more often but the pain points in the market are the meltdowns in former high-flying stocks that aren’t considered to be highly economically sensitive and credit spreads are still relatively well behaved, then it isn’t a growth scare yet! But it could certainly become one. Or not!
Of note: financials, an indisputably cyclical sector whose outlook is inextricably tied to the health of the US economy, was the best-performing S&P 500 sector ETF on Thursday, putting in a 0.6% gain.
If you’re in the midst of a growth scare or tariff-induced sell-off, the top things to monitor are the evolution of the economic data and any chatter related to trade barriers. If you’re looking for what reverses a momentum breakdown, the answer is much more likely to be found in technicals and flows — key levels where certain important names might find a floor. To that end, Nvidia has broken down below its 200-day moving average, and Tesla is trading nearly bang on that level.
