Nasdaq Enters Correction as Trade Tariff Concerns Mount

The Nasdaq Composite officially entered correction territory on Thursday, marking a decline that began after its peak in December. The downturn, driven by growing anxieties over global trade policies and the high valuations of AI-focused tech giants, has weighed heavily on investor sentiment.

With a 2.6% drop on Thursday, the index has now fallen 10.4% from its record high on December 16, meeting the commonly accepted threshold for a correction.

Trade Tariffs and Economic Uncertainty Shake Markets

Concerns over U.S. President Donald Trump's tariff policies have intensified fears of rising inflation and an economic slowdown. This has led to widespread market volatility, pushing all three major U.S. stock indexes into negative territory for 2025.

Stocks took a sharp hit on Thursday after Trump announced a temporary exemption on tariffs for goods from Canada and Mexico. The unexpected policy shift has further unsettled investors, contributing to instability in financial markets.

"The optimism around Trump's economic policies has now turned into market uncertainty. Investors are adopting a cautious stance as mixed messages on tariffs continue to emerge from Washington," noted Gene Goldman, Chief Investment Officer at Cetera Investment Management.

AI Stocks Lose Momentum Amid Valuation Concerns

Another key factor behind the Nasdaq's decline is mounting skepticism regarding the lofty valuations of AI-driven tech companies. While artificial intelligence has fueled substantial market gains in recent years, concerns are rising over the sustainability of heavy investments in AI infrastructure.

Shares of Nvidia and major semiconductor firms slumped following Marvell Technology’s revenue forecast, which aligned with expectations but failed to reassure investors. The dip in AI stocks suggests that Wall Street’s enthusiasm for the sector may be cooling, at least in the short term.

As uncertainty around trade policy and tech valuations persists, market volatility is expected to remain high in the coming weeks.

(Sources: reuters.com)