Trump’s trade actions cause market turmoil, Bitcoin price drops – Detroit Free Press
Market turbulence ensued at the end of the week as stocks and other volatile financial instruments experienced a significant downturn. The downturn was fueled by a combination of escalating trade tensions, disappointing earnings reports, and signs of economic weakness, all of which eroded investor confidence.
President Donald Trump’s announcement of potential 25% tariffs on imports from Mexico and Canada, set to take effect on Tuesday, brought uncertainty to the markets. In addition, Trump also targeted European Union goods, specifically automobiles, and indicated a plan to impose an additional 10% tariff on Chinese imports. These broad and aggressive trade measures sent shockwaves through the markets, resulting in widespread selling activity, with cryptocurrencies being particularly impacted by the risk aversion sentiment.
Bitcoin, in particular, experienced a sharp decline, entering bear market territory after plummeting over 20% from its peak. The digital currency did see a slight rebound after dropping below $80,000 in early Friday trading. However, sentiments worsened in the cryptocurrency space following a major security breach at Bybit. Hackers managed to steal a staggering $1.5 billion worth of Ethereum, marking one of the largest crypto heists in history.
Amidst the market turmoil, the artificial intelligence sector, previously considered a chip darling, faced challenges as investors re-evaluated its high valuations. Nvidia Corp. took a hit after reporting earnings that, while surpassing expectations, failed to impress investors who had grown accustomed to significant beats. This decline in Nvidia’s stock price had a ripple effect on other tech companies in the sector, such as Advanced Micro Devices Inc., Broadcom Inc., Qualcomm Inc., and Intel Corp.
Furthermore, concerning economic data began to surface, exacerbating investor concerns. While the fourth-quarter gross domestic product growth remained steady at a 2.3% annualized rate, inflation metrics for the same period were revised upwards. In January, personal spending saw a 0.2% contraction, marking the first negative reading since March 2023. Additionally, the Personal Consumption Expenditure price index, considered the Federal Reserve’s preferred inflation gauge, came in at 2.5%, exceeding the 2% target. Housing data also disappointed, with pending home sales dropping 4.6% in January to record lows, as elevated mortgage rates continued to impact affordability and dampen market demand. The labor market showed signs of weakening, with a rise in weekly jobless claims to the highest level in over two months.
On a somewhat positive note, General Motors Co. announced a dividend increase for shareholders along with a new share buyback program. The automaker raised its quarterly dividend by three cents to 15 cents per share, set to take effect in April. Additionally, GM authorized a $6 billion share repurchase initiative, which includes a $2 billion accelerated buyback plan.
