US OPEN: Markets Trend Lower on Tariff Tensions

• US and European markets suffer broad declines (-1.5% to -2.5%) as Trump's new tariffs on Canada, Mexico, and China spark fears of a trade war escalation

• Traditional automakers (GM -6%, Ford -4%) and Tesla (-6%) tumble as US-Canada trade tensions escalate and potential retaliatory tariffs threaten the integrated North American auto market

• Nvidia (-5%) faces dual headwinds from AI efficiency concerns and potential chip tariffs, dragging down the broader tech sector

• Companies with significant Mexican exposure see sharp declines, led by Constellation Brands (-4%) and retailers like Lululemon (-3.2%), as new tariffs threaten to disrupt supply chains

• AbbVie (+2.4%) bucks the negative trend on analyst upgrades, emerging as one of the few bright spots in today's risk-off market

US Markets Reel Under Pressure: Major US indices are experiencing sharp declines amid escalating trade tensions, with the US2000 falling -2.36% to 2239.0. The US100 drops -1.96% to 21157.47, while the US500 declines -1.76% to 5957.9, and the US30 slides -1.41% to 44060. The VIX fear gauge has surged +8.97% to 18.83, reflecting heightened market anxiety over the new tariffs. The steep selloff comes as markets digest the Trump administration's implementation of 25% tariffs on Canada and Mexico, and 10% on China, effective Tuesday.

European Markets Extend Losses: European markets are broadly lower, with automotive and export-sensitive sectors leading the decline. The Polish W20 and Austrian AUT20 are the biggest losers, dropping -2.56% to 2393.6 and -2.54% to 3758 respectively. Major indices including the SPA35 (-1.63% to 12142), DE40 (-1.54% to 21397.2), and EU50 (-1.40% to 5196.6) are all significantly lower. The VSTOXX, Europe's fear gauge, has jumped +6.85% to 17.93, as investors brace for potential retaliatory measures from trading partners, with Canada already announcing plans for tariffs on $106B worth of US goods.

S&P 500 Sectors Show Mixed Performance. Source: Bloomberg Financial LP

Current volatility observed on Wall Street. Source: xStation 

The Nasdaq-100 index, represented by the US100 contract, has broken below the key support level at 21,255, which marks the mid-November high. Bears will aim for a retest of the 100-day SMA, opening the way for a move toward the 61.8% Fibonacci retracement level, which coincides with the lower Bollinger Band. Bulls, on the other hand, will attempt to push the price back above the 38.2% Fibonacci retracement level. The RSI has entered a zone that has historically led to reversals in the index, while the MACD is signaling bearish divergence. Source: xStation

Market News:

• Auto Sector Hit Hard: GM (-6%), Ford (-4%), and Stellantis (-5%) lead auto sector declines as North American supply chains face disruption. S&P Global notes that 22% of US vehicle sales in 2024 came from Canada and Mexico imports. Volkswagen, with 43% of US sales from Mexico, may consider exiting the US market.

• Nvidia Faces Double Pressure: Nvidia stock falls 5%, extending recent losses from DeepSeek AI efficiency concerns. The semiconductor giant faces additional pressure from potential chip import tariffs after CEO Jensen Huang's White House meeting.

• Consumer Brands Under Pressure: Constellation Brands (STZ.US) drops 4% as Piper Sandler downgrades the stock, citing Mexican beer import exposure (86% of sales). Lululemon (-3.2%) and Nike (-2.5%) decline on broader trade war concerns.

• Canada Targets Tesla: Tesla stock retreats 6% after former Canadian finance minister Chrystia Freeland calls for 100% tariffs on Tesla vehicles, specifically targeting Elon Musk's connection to Trump. The EV maker already faces challenges in Europe, with French sales dropping 63% amid political controversies.

• AbbVie (ABBV.US) Gains on Analyst Optimism: Shares of AbbVie rise 2.4% as multiple analysts express bullish sentiment. Morgan Stanley's Terence Flynn maintains an Overweight rating and raises the price target significantly from $224 to $239, while Raymond James analyst Gary Nachman reiterates an Outperform rating with a more modest price target increase from $218 to $220.

• Extended Trading Hours: Cboe Global Markets announces plans to expand US equities trading to 24 hours, five days a week on its EDGX Exchange, aiming to accommodate global investors, particularly from Asia Pacific markets.

Other news coming from individual S&P 500 index companies. Source: Bloomberg Financial LP