Dow Drops 800 Points Amid Trade and AI Fears

Market Reaction to Tariff Uncertainty

The Dow Jones Industrial Average experienced a significant decline, dropping 800 points, or approximately 1.6%, as investors reacted to the Supreme Court's decision to overturn President Trump's previous tariff policy. The S&P 500 and Nasdaq Composite also saw declines of 1.1% and 1.4%, respectively. The Court's ruling invalidated the emergency tariffs imposed last year, which initially buoyed market sentiment. However, the announcement of a new 15% blanket tariff on imports over the weekend has reignited concerns about global trade stability.

The European Union quickly rejected the tariff hike, calling for clarity on the U.S. administration's trade strategy. This uncertainty has left markets grappling with potential impacts on major trade agreements and economic growth prospects. The fallout has also affected currency markets, with the dollar weakening slightly against major peers. Wall Street's "fear gauge," the VIX, surged 14% to exceed 20 points, reflecting heightened investor anxiety.

AI Disruption and Sector Impact

Fears surrounding artificial intelligence (AI) disruption have weighed heavily on consulting and technology sectors. IBM saw its shares tumble 13% after AI company Anthropic announced a new tool capable of automating tasks traditionally handled by high-cost consulting teams. Accenture and Cognizant Technology also faced declines as investors reassessed the potential impact of AI on their business models.

Meanwhile, Nvidia remains in the spotlight ahead of its earnings report, expected later this week. As a leading supplier of AI-related chips, Nvidia's performance and guidance are closely watched for indications of the sector's trajectory amidst increasing competition and concerns over profit margins. Nvidia shares showed relative resilience, trading flat despite broader market declines.

Safe-Haven Assets and Volatility

Gold prices climbed to a three-week high, reaching approximately $5,230 per ounce, as investors sought refuge in safe-haven assets amid growing market instability. The precious metal has gained 19% year-to-date, reflecting its role as a hedge against economic and geopolitical uncertainty. Silver also experienced an uptick, rising 12% over the past few sessions.

The CBOE Volatility Index (VIX) surpassed the 20-point mark, signaling elevated market fear levels. Treasury yields fell as bond prices rose, with the 10-year yield dropping six basis points to 4.01%. Investors are increasingly shifting toward safe assets, reflecting concerns over the unpredictable nature of trade policies and the broader economic outlook.