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Market Commentary - Foreign Markets

The Nasdaq plunged to a nearly four-month low while the S&P 500 and Dow also slid. Nvidia's strong earnings turned sour with a warning about rising global competition.

Nasdaq Drops 2.8% as Nvidia Faces Competition, Tariff Concerns Add Pressure

28-Feb-2025, 11:06
The Nasdaq plunged 530.84 points (2.8%) to a nearly four-month closing low of 18,544.41. The S&P 500 also slumped 94.49 points (1.6%) to a one-month closing low of 5,861.57 while the narrower Dow fell 193.62 points (0.5 %) to a one-month closing low of 43,239.50.

Stocks initially benefited from a positive reaction to earnings news from Nvidia (NVDA), which reported better than expected fourth quarter results. However, shares of Nvidia subsequently tumbled by 8.5% as the AI darling and market leader also warned about increase global competition.

The previously paused 25% tariffs on imports from Mexico and Canada will come into effect on 4thMarch with an additional 10% tariff on imports from China will also be imposed on that date, claiming drugs are pouring into the U.S. from Mexico and Canada and that a large %age of the drugs are supplied by China. The president also said in a Truth Social post that the April 2nd date for reciprocal tariffs on other U.S. trade partners will remain in full force and effect.

The latest batch of U.S. economic data includes a Labor Department report showing first-time claims for U.S. unemployment benefits which climbed much more than expected in the week ended February 22nd. A separate report released by the Commerce Department showed durable goods orders surged by much more than expected in January, although the growth was largely due to a spike in volatile orders for transportation equipment.

Semiconductor stocks were substantially weak which made Philadelphia Semiconductor Index to nosedive by 6.1%. Computer hardware stocks were considerably weak ith the NYSE Arca Computer Hardware Index plummeting by 5.1%. Gold stocks also moved sharply lower, dragging the NYSE Arca Gold Bugs Index down by 3.8%. Utilities, software and airline stocks too were significantly weak, moving lower along with most of the other major sectors.

Asia-Pacific stocks turned in a mixed performance. Japan's Nikkei 225 Index rose by 0.3%, while Hong Kong's Hang Seng Index dipped by 0.3%. European stocks moved mostly lower on the day. The German DAX Index slumped by 1.1% and the French CAC 40 Index slid by 0.5%, although the U.K.'s FTSE 100 Index bucked the downtrend and increased by 0.3%.

In the bond market, treasuries gave back ground after moving sharply higher over the past several sessions. Subsequently, the yield on the benchmark ten-year note which moves opposite of its price, climbed 3.6 bps to 4.28%.