Early last month, stock markets spent weeks trying to form a bottom. The rally in Nasdaq (QQQ), S&P 500 (SPY), and Russell 2000 (IWM) stalled last week. Tariffs are all that stock market traders may think about. The impact of tariffs is hurting consumer sentiment. They will cut back on spending.
When consumers slow their spending, corporations must cut costs, reduce staff, and spend less on advertising. Companies that depend on advertising include Alphabet (GOOG), Meta Platforms (META), The Trade Desk (TTD), and Applovin (APP). Shares in those firms either stalled in their rally or are already trending lower.
Markets will continue to process the impact of Trump tariffs on the global economy. On Monday, Japan’s stock market started the week down by 4%. Asian markets worry about Trump’s recent 25% tariffs on automobiles made outside of the U.S. The U.S. is increasing its trade hostilities against its major trade partners: Mexico, China, Canada, Europe, South Korea, and Japan.
Risks Increased
Stock markets may not have priced in Trump-era tariffs. If it does, it may erase the stock’s rally that began in late 2022. Back then, technology stocks rose as markets priced in the seemingly exponential growth in artificial intelligence. Unfortunately, corporations will review the revenue generated from chatbots. They will also look at the cost savings from AI projects.
Revenue for companies will drop from tariffs. This increases a selloff for AI-related suppliers like Nvidia (NVDA), Microsoft (MSFT), and Alphabet.
