By Alexander Osipovich

The Dow Jones Industrial Average dropped nearly 650 points on Monday as President Trump confirmed that he would impose a 25% levy on Canadian and Mexican goods, dashing investors' hopes for a last-minute reprieve.

The declines were broad-based, with 23 of the 30 stocks in the blue-chip index and seven of the 11 sectors in the S&P 500 falling.

Market darling Nvidia sank 8.7%, oil company ConocoPhillips slid 6.6% and discount retailer Dollar Tree declined 5.6%.

Hours ahead of the tariff deadline, Trump told reporters that there was "no room left" for negotiations. Although Wall Street has welcomed many of Trump's economic policies, such as cutting taxes and regulation, his threats to impose tariffs have stoked fears of a trade war with major U.S. trading partners. Such a standoff could lead to slower growth and higher prices for consumers.

"He's willing to do the shock and awe on trade and show that he's serious, and he's willing to put up with short-term market pain," said Scott Martin, chief investment officer of Kingsview Wealth Management.

"I don't believe this is going to be an all-out trade war," Martin said, adding that his firm had taken advantage of the drop to buy beaten-down technology shares.

Martin argued that the Canada and Mexico tariffs -- along with Trump's plan to ramp up duties on Chinese goods -- were part of a long game by the president to extract concessions from trading partners, which would ultimately benefit the U.S.

The technology-heavy Nasdaq Composite slid 2.6%, falling to a level last seen just before Trump's election victory in November.

The S&P 500 fell 1.8%, while the Dow closed 1.5% lower in a rocky first trading session in March. The losses came after all three indexes fell in February, retreating from post-election record highs. Despite its recent losses, the Dow is up 1.5% for 2025; the other two indexes are in the red.

New data released Monday morning showed U.S. manufacturers' supply costs jumped in February, as Trump's tariff threats raised the specter of higher inflation.

Tech stocks were the worst-performing sector of the S&P 500, with trade-sensitive chip makers among the biggest losers.

As U.S. stocks fell, European stocks rallied, pushing the pan-continental Stoxx Europe 600, the U.K.'s FTSE 100 and Germany's DAX to fresh records.

Some of the biggest gainers were defense stocks, which surged after the region's leaders talked up military spending. European governments are scrambling to put together a Ukraine-Russia peace plan in the wake of Trump's rancorous meeting with Ukraine's president on Friday. London-listed shares of BAE Systems jumped 15%.

Bitcoin was trading at about $85,900 late Monday afternoon, having erased practically all of its gains from a Sunday rally sparked by Trump's comments on creating a U.S. strategic crypto reserve. Many details on how such a reserve would work remain unclear.

The U.S. 10-year Treasury yield fell to 4.178%, from 4.228% on Friday, as investors flocked to the perceived haven of government bonds.

Write to Alexander Osipovich at alexo@wsj.com

(END) Dow Jones Newswires

March 03, 2025 16:41 ET (21:41 GMT)

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