SOTS 2nd Hour: Tariffs Sell-off Breakdown: From Retail to Big Tech to the Fed’s Next Moves 3/4/25

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Sara Eisen (0:44)

Good Tuesday morning. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber, live as always from Post 9 of the New York Stock Exchange. It's ugly out there for stocks. Yes, we continue to move south since the open, down 1.5% on the S&P 500, 1.4% on the Dow, which is now down more than 600 points, and the NASDAQ down 1.5% as well. It's a broad-based sell-off as those tariffs on Mexico and Canada go into effect, 25% tariffs. President Trump following through with his threat there, and we are seeing continued selling. Buying in the bond market, though, flocking to the safe haven, US. Treasuries, pricing in lower growth. The 10-year yield now 4.13.

Remember, we were as high as 4.8 in January, inching toward that 5% level. We've come all the way back down, so buying bonds with lower yields across the board, more Fed cuts get priced in. Only two sectors are higher in the market, consumer staples and utilities. Both are defensive plays. Everybody else is lower, and financials are actually taking it the hardest, down 3%, consumer discretionary also down almost 3%. 30 minutes here into the trading session. Here are some individual movers we're watching. Fresh results out of retailers. Target, Best Buy and more on the move. We're going to get the streets take in just a moment. Most of them are lower. We're watching Big Tech as well, following yesterday's big sell-off. Bank of America cuts its price target on Tesla by more than $100, $380 a share now. Nvidia trading around its lowest levels since last September after losing roughly $300 billion in market cap just yesterday. And then I mentioned the financials. Worst performing sector on the S&P this morning, names like Citigroup, Wells Fargo, Morgan Stanley, among the biggest drags. They had been among the biggest winners so far this year. And it is day one of President Trump's new tariffs on Mexico, Canada and China. We're watching the fallout from retail to technology as well as the Fed next move. We're going to talk about all of those implications, which are clearly front and center this morning for investors.

Carl Quintanilla (2:48)

Meantime, Canadian Prime Minister Justin Trudeau is set to hold a press conference in about half an hour. We're going to take you live when it happens. But first, let's get to Megan Casella at the White House with the latest on these tariff moves. Morning, Megan.

Megan Casella (3:00)

Hey, Carl. Good morning. So this is by far the most aggressive trade move that we've seen from President Trump. Even going back to the start of his very first term, it's more than a trillion dollars in goods getting caught up here. And that's before you start to count in the retaliation. And there was a lot of hope, guys. And I would say even expectation all the way up until midnight last night. That we might not get to this point. That we might see another delay. But the Trump administration being very firm now. And Commerce Secretary Howard Lutnick making the case that none of the three countries have done enough to stop fentanyl deaths. And that that's what they want to see the most.

Sara Eisen (3:31)

Take a listen.

Howard Lutnick (3:33)

So if they can stop the flow of fentanyl and they can prove to the president they can stop the flow of fentanyl, then of course the president can remove these tariffs. But you've seen it. But it has not been a statistically relevant reduction of deaths in America. It's just black and white.

Megan Casella (3:51)

So the only way, they say now, of lifting those tariffs is if we see a statistically significant reduction in deaths from fentanyl. Something to watch there. But all three countries, meantime, making moves to retaliate. China putting tariffs of about 10 to 15 percent mostly on agricultural products. They say they're also blacklisting about 25 US companies. Mexico's president, just in the last few minutes, saying that she does plan to talk with President Trump this week, likely on Thursday, that she'll detail her retaliation on Sunday. And then Canada, as you mentioned, we'll hear from Justin Trudeau later this hour. We'll bring you those headlines and bring you that live as we have it. But they're also planning their own retaliation guys' tariffs on about 108 billion dollars worth of US goods. So we'll see if we get more specifics from him as well.