U.S. stocks experienced a notable decline on Monday, driven by President Donald Trump's swift implementation of new tariffs and ongoing investor anxieties regarding companies potentially disadvantaged by the artificial-intelligence revolution. The S&P 500 dropped 0.8%, with the Dow Jones Industrial Average falling 1.3%, or 659 points, and the Nasdaq composite down 0.9% by midday Eastern time.

President Trump's announcement on Saturday to impose temporary 15% tariffs on other countries, an increase from the 10% rate declared Friday, followed a Supreme Court ruling that had struck down his broader "reciprocal" taxes. This quick escalation underscores the persistent uncertainty in the global economy. Despite the Supreme Court's decision limiting his legal authority for sweeping tariffs, Trump is pursuing other avenues for more permanent tariffs, causing unease among international trading partners, as noted by South Korea's trade minister, Kim Jung-kwan.

While significant, Monday's market downturn was not as severe as the panic observed in April following Trump's initial "Liberation Day" tariff announcements. The U.S. dollar saw only a modest decline against other currencies, and Bitcoin, though briefly dipping below $65,000, remained above its earlier monthly low. Gold, a traditional safe haven, continued to appreciate amid the uncertain economic climate. Investors appear to anticipate a protracted period of ambiguity, possibly requiring more legal challenges, before the future of global trade becomes clear. Chris Larkin from E-Trade by Morgan Stanley commented that the Supreme Court's tariff ruling merely "opened a new chapter in the trade saga, not end it."

On Wall Street, companies perceived as vulnerable to competition from AI-powered rivals faced substantial losses. This trend reflects investors' recent inclination to penalize stocks of companies that could be undercut by advancements in artificial intelligence. For instance, cybersecurity firm CrowdStrike plummeted 9.7%, bringing its year-to-date loss to 25%. This sector-wide concern was exacerbated by the introduction of a new tool from Anthropic, designed to scan codebases for vulnerabilities and suggest patches, intensifying competitive pressures. AppLovin, a software company, also sank 9%, as worries mount that AI competition will divert customers and fundamentally reshape their industries.

Further apprehension on Wall Street revolves around the impending profit report from Nvidia, expected on Wednesday. There are growing concerns that major tech companies, such as Alphabet and Amazon, might be investing so heavily in Nvidia's chips that they could struggle to recoup these substantial investments through enhanced productivity and future profits. This reflects a broader anxiety about the long-term return on investment in the rapidly evolving AI landscape.

Beyond tariffs and AI, other sectors also experienced notable declines. Airline stocks were hit hard after severe snow and high winds led to thousands of flight cancellations across the busy Northeast region. United Airlines dropped 4.3%, American Airlines fell 4.5%, and Delta Air Lines sank 3.6%. In the pharmaceutical sector, Novo Nordisk's U.S.-traded stock tumbled 16.1% following trial results for its CagriSema drug, which showed a smaller percentage of weight loss compared to a rival drug from Eli Lilly. Conversely, Eli Lilly's stock rose 4.7% on the news.

Internationally, stock indexes in Europe also fell, reversing gains made on Friday after the Supreme Court's tariff ruling. Asian markets, however, showed mixed reactions; Hong Kong's Hang Seng index jumped 2.5%, and South Korea's Kospi increased a more modest 0.6%, with markets in Japan and mainland China closed for holidays. In the bond market, the yield on the 10-year Treasury bond decreased to 4.03% from 4.08% at the close of Friday.

Adding to the market's complexities, a top official at the Federal Reserve indicated that a decision on whether to cut the main interest rate at its next meeting in March or maintain it is "a coin flip." These comments from Fed Governor Christopher Waller represent a notable shift from January, when he had dissented against the central bank's decision to keep rates steady after three cuts late last year. While lower rates could stimulate the economy – a move aggressively advocated by President Trump – they also carry the risk of exacerbating inflation.