Wall Street experienced a significant decline as uncertainty surrounding tariffs and a slump in AI stocks led to a sharp drop in the Nasdaq index, which closed more than 10% below its previous record. The S&P 500 fell by 1.8%, the Dow Jones Industrial Average by 1%, and the Nasdaq composite by 2.6%. This downward trend was exacerbated by President Donald Trump’s tariff policies, with the market reacting to the back-and-forth nature of tariff negotiations.

Despite offering a one-month reprieve on tariffs for imports from Mexico and Canada, President Trump’s tariff decisions have created an atmosphere of unpredictability, leaving businesses cautious and households anticipating higher inflation. The ongoing tariff uncertainties have led to concerns among investors and businesses, with fears of lasting damage to global economic activity. The market’s response to Trump’s tariff delays reflects the general unease and lack of clarity in the current trade environment.

The upcoming U.S. Labor Department report on February job numbers will be closely watched by investors as a key indicator of economic health. The job market, along with consumer spending, plays a crucial role in preventing a recession. However, recent warnings from retailers like Macy’s and Victoria’s Secret about future profits have added to the market’s concerns about consumer spending.

In addition to tariff uncertainties, the stock market saw a decline in AI-related companies, with semiconductor stocks taking a hit. Marvell Technology and other AI superstars experienced significant losses, contributing to the overall market downturn. The decline in these tech giants, which have been driving the market’s growth, further added to the negative sentiment on Wall Street.

Internationally, European markets reacted positively to the European Central Bank’s decision to cut interest rates, while Asian markets saw mixed results amid ongoing trade tensions. The Chinese commerce minister emphasized that China will not yield to pressure and can withstand higher tariffs, signaling the country’s resilience in the face of trade disputes.

Overall, the market’s response to tariff uncertainties and the decline in AI stocks underscores the fragility of the current economic landscape and the need for clarity and stability in trade policies to restore investor confidence and market stability.