Nasdaq drops 1.2% as China hits back with tariffs
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The Nasdaq Composite slumped 1.2% on Monday as tech stocks faced renewed selling pressure following tariff uncertainty. After an initial market shock from Trump’s 25% tariffs on Mexico and Canada, a temporary 30-day delay provided a brief relief rally. However, early Tuesday, China retaliated with its own tariffs, further unsettling investors.
China Responds with 15% Tariffs on US Goods
Beijing’s countermeasure includes 15% tariffs on coal and liquified natural gas (LNG) starting February 10, while a 10% levy will hit US crude oil, farm equipment, and select automobiles. This escalation adds new risks to an already fragile market, as US businesses brace for higher import costs amid ongoing trade tensions. The US had already imposed a 10% tariff on all Chinese imports, amplifying fears that retaliatory measures will intensify economic strain. Investors now weigh the long-term impact on supply chains and corporate margins, particularly in sectors exposed to raw materials and energy costs.
Market Focus Shifts to Nonfarm Payrolls
Beyond tariffs, macroeconomic concerns loom. The nonfarm payrolls report on Friday is projected to show 154,000 new jobs added in January, a steep decline from December’s 254,000. A weaker-than-expected labor report could fuel speculation over the Federal Reserve’s next policy move, adding another layer of market volatility.
Technical Outlook: Nasdaq Under Pressure
Nasdaq futures indicate a soft open, with broader market sentiment skewed to the downside. If tariff concerns persist, the index may test key support levels near 15,200, while a break lower could expose 14,900. On the upside, resistance remains firm at 15,750, a level bulls must reclaim to regain momentum.
Conclusion: Trade War Risks Cloud Market Sentiment
While a solid earnings season provided tailwinds, tariff uncertainty now dominates market direction. With China’s response escalating tensions, investors must navigate heightened volatility, balancing macroeconomic risks with earnings fundamentals. The next major catalyst will be Friday’s labor report, which could dictate the market’s near-term trajectory.
China Responds with 15% Tariffs on US Goods
Beijing’s countermeasure includes 15% tariffs on coal and liquified natural gas (LNG) starting February 10, while a 10% levy will hit US crude oil, farm equipment, and select automobiles. This escalation adds new risks to an already fragile market, as US businesses brace for higher import costs amid ongoing trade tensions. The US had already imposed a 10% tariff on all Chinese imports, amplifying fears that retaliatory measures will intensify economic strain. Investors now weigh the long-term impact on supply chains and corporate margins, particularly in sectors exposed to raw materials and energy costs.
Market Focus Shifts to Nonfarm Payrolls
Beyond tariffs, macroeconomic concerns loom. The nonfarm payrolls report on Friday is projected to show 154,000 new jobs added in January, a steep decline from December’s 254,000. A weaker-than-expected labor report could fuel speculation over the Federal Reserve’s next policy move, adding another layer of market volatility.
Technical Outlook: Nasdaq Under Pressure
Nasdaq futures indicate a soft open, with broader market sentiment skewed to the downside. If tariff concerns persist, the index may test key support levels near 15,200, while a break lower could expose 14,900. On the upside, resistance remains firm at 15,750, a level bulls must reclaim to regain momentum.
Conclusion: Trade War Risks Cloud Market Sentiment
While a solid earnings season provided tailwinds, tariff uncertainty now dominates market direction. With China’s response escalating tensions, investors must navigate heightened volatility, balancing macroeconomic risks with earnings fundamentals. The next major catalyst will be Friday’s labor report, which could dictate the market’s near-term trajectory.