Guests including Mark Zuckerberg, Lauren Sanchez, Jeff Bezos, Sundar Pichai and Elon Musk attend the Inauguration of Donald J. Trump in the U.S. Capitol Rotunda on January 20, 2025 in Washington, DC. Donald Trump takes office for his second term as the 47th president of the United States.
Julia Demaree Nikhinson | Getty Images
So much for the Trump bump.
After plunging 2.6% on Thursday, the Nasdaq has wiped out all of its post-election gains and is on pace for its worst week since September, as investors fret over tariffs, weaker-than-expected employment numbers and a potential cooling in the artificial intelligence market.
The selloff marks a big reversal for tech, especially after the industry’s top executives went out of their way to show their support for Donald Trump following his election victory in November, traveling to see him at his Mar-a-Lago resort in Florida and publicly announcing their contributions to his inauguration. Many of the industry’s biggest names, including Apple’s Tim Cook, Meta’s Mark Zuckerberg, Amazon founder Jeff Bezos and Alphabet CEO Sundar Pichai attended the inauguration in Washington, D.C., in January.
Those companies all contributed to the tech rally over the past two years. The Nasdaq jumped 43% in 2023 and 29% last year, driven by gains in Nvidia, Meta and other companies that are viewed as major beneficiaries of the AI boom.
Aaron Dunn, Morgan Stanley Investment Management co-head of value equity, told CNBC’s “The Exchange” on Thursday that uncertainty surrounding Trump’s economic policies coupled with a broad shift away from risk is at the heart of the move.
“We really want to focus on businesses that we would call all-weather businesses in the market,” said Dunn. He added that the market is seeing the unwinding of the high-risk trade, with a rotation into companies that can handle “whatever the volatility is from the administration, it’s going to be daily.”
Investors are particularly concerned about the increased costs of goods for businesses that will likely result from tariffs, and higher consumer prices that will follow, as well as retaliatory tariffs that will make exports more difficult.
At midnight Tuesday, 25% tariffs on imports from America’s top two trading partners, Canada and Mexico, went into effect, as did an additional 10% tariff on Chinese imports. Tariffs on Canadian energy, at a rate of 10%, also began at midnight Tuesday. Though Trump subsequently issued temporary tariff exemptions for a wide range of goods coming from Canada and Mexico, the market continued its downward slide.
Among tech’s megacap companies, the worst performer this year is Tesla, which is down 35% after dropping almost 6% on Thursday. The automaker’s slide is particularly notable considering CEO Elon Musk’s central position in the second Trump administration.
February, Musk’s first full month in the White House, marked Tesla’s worst month on the stock market since 2022. The stock is trading at its lowest since Election Day, Nov. 5, and is 45% below its record reached in December.
Nvidia has slid 18% this year, including a more than 11% decline this week, and is trading at its lowest since September. The chipmaker, which has powered much of the AI market with its graphics processing units, counts on major trade partners across the globe.
The company’s processors are mostly made in Taiwan, but some of its sophisticated systems and full computers surrounding the chips are manufactured in other regions, including Mexico and the U.S.
“Tariffs at this point, it’s an unknown until we understand further what the U.S. government’s plan is,” Nvidia finance chief Colette Kress told investors on the company’s earnings call late last month.
Chipmaker Broadcom, which more than doubled in value last year due to soaring demand for its AI systems, has fallen 22% this year. Broadcom shares rallied in extended trading on Thursday after earnings.
Marvell Technology led Thursday’s drop in chipmakers, plunging 20% after guidance fell short of some elevated buyside estimates. The stock is now down 35% for the year.
In addition to tariffs and trade, Wall Street is worried about jobs. Private sector job creation slowed to a crawl in February, fueling concerns of an economic slowdown, payrolls processing firm ADP reported Wednesday. Companies added just 77,000 new workers for the month, below the 148,000 Dow Jones consensus estimate, according to seasonally adjusted figures from ADP.
Without a huge rally on Friday, the Nasdaq will finish lower for its third straight week and fifth week in the past six.
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