The Nasdaq Composite has slipped into correction territory as U.S. President Donald Trump extended a tariff pause to include goods from Canada and Mexico that adhere to the terms of the United States-Mexico-Canada Agreement. This move, aimed at easing trade tensions, failed to reassure investors, leading to a downturn in major U.S. stock indices. Unlike the market reaction to the previous tariff reprieve for automakers, this latest development saw the Nasdaq lose its post-election gains.

The Trump administration’s persistent stance on tariffs, despite acknowledging the associated consequences, has raised concerns among investors. Trump’s apparent indifference to market reactions has dashed hopes pinned on the so-called “Trump put,” a belief that the president would prevent significant stock declines. Meanwhile, U.S. Treasury Secretary Scott Bessent downplayed the significance of “cheap goods” in the American economy, emphasizing the multifaceted role tariffs play in generating revenue, safeguarding industries, and serving as a negotiating tool.

In related news, China experienced a slowdown in export growth, falling short of expectations, with its Foreign Affairs Minister urging the U.S. to avoid imposing arbitrary tariffs. On the cryptocurrency front, Trump signed an executive order establishing a Strategic Bitcoin Reserve funded by seized bitcoins, causing a dip in Bitcoin prices due to the absence of plans for U.S. purchases.

The labor market also witnessed a surge in layoffs, surpassing figures seen during the pandemic, with a significant portion attributed to efforts led by Elon Musk to reduce federal employment. This news, coupled with the ongoing tariff fluctuations, contributed to a decline in U.S. stock markets, with the Nasdaq entering correction territory. The European Central Bank’s decision to cut interest rates added to the global economic landscape, with implications for market dynamics.

Overall, the evolving tariff situation, coupled with geopolitical and economic developments, continues to shape market sentiment globally. Investors are closely monitoring policy shifts and trade updates, as market reactions to these factors remain a key driver of investment decisions in an increasingly interconnected financial landscape.