Jamie Spencer
The S&P 500 fell on Monday, snapping its longest winning streak in 20 years, as investors digested U.S. President Donald Trump’s latest tariff announcement, just ahead of the Federal Reserve’s monetary policy decision later this week.
On Sunday, Trump revealed a controversial 100% tariff on movies produced outside the U.S., but offered no specifics on how such tariffs would be implemented. This uncertainty contributed to volatility in stock markets.
Since Trump first introduced his tariffs on April 2, stocks had been volatile. The S&P 500 initially dropped nearly 15%, but recovered and climbed for the next nine sessions, marking its longest streak of gains since 2004. However, Monday’s losses indicated the challenges ahead.
Trump’s Tariff Plans and Market Volatility
In a statement on Monday, Treasury Secretary Scott Bessent defended Trump’s tariff, tax-cut, and deregulation agenda, claiming these moves would stimulate long-term investment in the U.S. and help markets overcome short-term turbulence. However, analysts remain concerned about the potential long-term effects.
“Nine up days in the S&P 500 is hard to maintain,” said Art Hogan, Chief Market Strategist at B Riley Wealth. “We are starting to price in that deals might be announced, but every week we don’t see progress is doing economic damage.”
According to preliminary data, the S&P 500 lost 35.47 points, or 0.62%, closing at 5,651.20 points. Meanwhile, the Nasdaq Composite fell 138.72 points, or 0.73%, to 17,839.01, and the Dow Jones Industrial Average dropped 102.10 points, or 0.25%, to 41,215.33.
Tariff Concerns Shake the Film Industry
Stocks in the movie and television production industry, such as Netflix (NFLX.O), Amazon (AMZN.O), and Paramount Global (PARA.O), took a hit after Trump’s announcement. Netflix’s stock snapped its 11-session winning streak, while other entertainment giants also faced declines.
Energy Sector Impacted by OPEC+ Decisions
The energy sector was the worst performer on the day. This came after OPEC+ decided to accelerate its output hikes, raising concerns about increased supply amid uncertain demand. Energy stocks dropped significantly.
Meanwhile, Berkshire Hathaway’s Class B shares declined following news that Warren Buffett would step down as CEO of the conglomerate.
Investors Eye Federal Reserve’s Decision
On the economic front, data from the Institute for Supply Management showed that the services sector’s growth accelerated in April. However, a measure of prices paid by businesses for materials and services surged to its highest level in over two years, signaling inflationary pressures linked to the tariffs.
The Federal Reserve is expected to announce its monetary policy decision on Wednesday. Investors are largely anticipating that the central bank will keep interest rates unchanged. However, any commentary from Fed Chair Jerome Powell about future rate cuts will be closely watched, especially with about 75 basis points of cuts already priced in for 2025.
Corporate Profitability Under Pressure
Concerns are mounting regarding how tariffs will impact corporate profitability. Tyson Foods (TSN.N) saw a drop after missing quarterly revenue expectations, while Skechers (SKX.N) surged following news of its $9.4 billion deal to be taken private by 3G Capital.
