Posted on March 7, 2025, by Niftynews
The Nasdaq correction was officially confirmed on Thursday, as the index fell 2.6%, continuing its decline from the record high it set in December. With more tariff news driving market uncertainty, the Nasdaq reflects broader concerns about the impact of President Trump’s shifting trade policies.
This downturn comes amid continued volatility in the global bond market, following significant increases in bond yields, including the 10-year German Bund yield, which saw its largest rise in decades.
Tariff News Drives Investor Volatility
Thursday’s market moves were heavily influenced by the latest tariff news from the U.S., which added to the Nasdaq correction. Trump’s decision to exempt Canada and Mexico from his newly imposed 25% tariffs for a month has fueled confusion and uncertainty among investors, leading to a volatile trading environment.
Tim Ghriskey, a senior portfolio strategist, noted, “Trump has been very confusing about these tariffs. One day they’re on, and the next day they’re off for a month,” which only intensifies market volatility.
The Nasdaq Correction: Stocks and Volatility Indexes React
As the Nasdaq correction unfolded, other major stock indexes also posted losses. The Dow Jones Industrial Average dropped by 0.99%, and the S&P 500 fell by 1.78%. The Nasdaq Composite was down by 2.61%, confirming a correction that is now 10.4% below its peak from December 16.
The Cboe Volatility Index (VIX), often referred to as the fear gauge, rose to its highest level since December, reflecting the growing investor unease caused by the tariff-related uncertainties.
The Global Bond Market Sells Off
While the Nasdaq correction dominated headlines, the global bond market selloff also continued, with 10-year German Bund yields rising sharply by 10 basis points to 2.884%. This increase followed a significant jump in bond yields the day before, adding to concerns about rising borrowing costs globally.
U.S. bond yields also rose, with the 10-year Treasury yield climbing by 1.5 basis points to 4.282%, from 4.267% the previous day. The rise in bond yields is a sign that investors are bracing for a potential tightening of financial conditions in response to ongoing tariff uncertainty.
Dollar Weakens as Risk Aversion Grows
The Nasdaq correction and continued volatility spilled over into the currency markets, where the U.S. dollar weakened. Investors turned to safe-haven currencies, such as the Japanese yen and the Swiss franc, amid fears that the tariffs could negatively impact the U.S. economy.
By afternoon trading, the dollar had fallen by 0.9% against the yen, hitting a five-month low. It also dropped to a three-month low against the Swiss franc. These moves suggest a growing aversion to risk and reflect broader concerns about the potential impact of Trump’s tariffs on global trade and economic growth.
Oil, Gold, and Economic Data
While the Nasdaq correction and tariff developments dominated market sentiment, oil prices remained relatively stable. Brent crude rose by 0.2%, and West Texas Intermediate gained 0.1%, with oil prices settling at $69.46 and $66.36 per barrel, respectively.
Spot gold saw a slight dip of 0.1%, closing at $2,915.83 an ounce. However, the economic data released on Thursday offered mixed signals. U.S. jobless claims unexpectedly dropped, but global outplacement firm Challenger, Gray & Christmas reported a massive increase in planned job cuts, raising concerns about the broader economic picture.
Geopolitical Tensions Add to Market Woes
Investor unease also deepened due to geopolitical risks. European leaders expressed concern over the U.S.’s reversal of military aid to Ukraine, which further raised fears about the shifting dynamics of global defense and security. This added to the overall sense of market uncertainty, contributing to the Nasdaq correction and broader market declines.
Conclusion: What’s Next for the Nasdaq Correction?
The Nasdaq correction is expected to continue in the short term as tariff news and global bond market volatility keep investors on edge. With the Nasdaq stock index now down more than 10% from its December high, the outlook for the broader stock market remains uncertain.
As the global bond market selloff continues and geopolitical risks rise, investors will be closely watching the next developments in tariff policy and the broader economic landscape. For now, the Nasdaq correction remains a key focus of market participants.
