U.S. stocks drop after Trump ramps up his tariffs and worries flare about potential AI losers

Options trader Anthony Spina works on the floor of the New York Stock Exchange, Thursday, Feb. 19, 2026. (AP Photo/Richard Drew)

NEW YORK (AP) — U.S. stocks slumped after President Donald Trump ramped up his newest tariffs, while investors continued to punish companies that could be losers in the artificial-intelligence revolution.

The S&P 500 sank 1 per cent Monday. The Dow Jones Industrial Average dropped 1.7 per cent, and the Nasdaq composite fell 1.1 per cent. Cybersecurity and software stocks fell to some of the market’s sharpest losses on worries AI-powered rivals could undercut their profits. The U.S. dollar’s value edged lower against other currencies, while gold continued to rise as Trump’s latest tariff move raised uncertainty. Bitcoin briefly fell below US$64,000 but remained above its low point reached earlier this month. Treasury yields sank.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. stocks are falling Monday after President Donald Trump took little time to ramp up his newest tariffs, and as investors continue to punish companies that could be losers in the artificial-intelligence revolution.

The S&P 500 sank 1.2 per cent after Trump said on Saturday that he would place temporary 15 per cent tariffs on other countries. That’s up from the 10 per cent rate he had announced Friday in response to a Supreme Court ruling that struck down his sweeping “reciprocal” taxes on imports from around the world.

The Dow Jones Industrial Average was down 835 points, or 1.7 per cent, as of 2:34 p.m. Eastern time, and the Nasdaq composite was 1.3 per cent lower.

Trump’s quick shift toward more aggressive tariffs shows how much uncertainty still hangs over the global economy, even after the Supreme Court said the president lacked the legal authority to institute his sweeping “reciprocal” tariffs.

Beyond a 15 per cent tariff that could last for up to 150 days, unless Congress extends it further, Trump is moving forward on other avenues to place more permanent tariffs on countries and industries. That has trading partners worldwide uneasy. South Korea’s trade minister, Kim Jung-kwan, said Monday that uncertainty may worsen if the Trump administration continues imposing new tariffs under alternative laws.

To be sure, Monday’s moves for markets weren’t close to as bad as the panic that swept the world in April, when Trump initially announced his “Liberation Day” tariffs.

The U.S. dollar’s value edged only a bit lower against other currencies on Monday, while bitcoin briefly fell below US$65,000 but remained above its low point reached earlier this month. Gold continued to rise thanks to its reputation as something safer to own during uncertain times.

Investors may be sensing it will take a long time, as well as more court battles, before more clarity comes about how global trade will look.

“Stocks got a boost Friday from the Supreme Court’s tariff ruling, but it quickly became clear that the decision was simply going to open a new chapter in the trade saga, not end it,” according to Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.

On Wall Street, big losses hit companies under suspicion of getting undercut by AI-powered rivals. Investors have been sharply and suddenly punishing stocks of such companies recently.

CrowdStrike fell 11.4 per cent to widen its loss for the young year so far to 25 per cent. A new tool from Anthropic that scans codebases for security vulnerabilities and suggests targeted software patches for human review is hitting stocks across the cybersecurity industry.

AppLovin sank 9.7 per cent. It’s among the software companies hurt by worries that AI competition will steal customers and fundamentally reset their industries.

More big moves may still be ahead for Wall Street this week, particularly with a profit report from Nvidia looming on Wednesday.

Worries are rising that companies like Alphabet and Amazon may be spending so much on Nvidia’s chips that they’ll never be able to recoup their investments through higher productivity and future profits.

Elsewhere on Wall Street, stocks of airlines fell after heavy snow and high winds canceled thousands of flights across the busy Northeast.

United Airlines lost 4.8 per cent, American Airlines fell 4.8 per cent and Delta Air Lines sank 3.9 per cent.

Novo Nordisk’s stock that trades in the United States tumbled 16.1 per cent after the Danish drugmaker said a trial for its CagriSema drug showed people lost a smaller percentage of their weight than with a similar one made by rival Eli Lilly. Eli Lilly rose 4.2 per cent.

In stock markets abroad, indexes mostly fell in Europe. They had risen on Friday after the Supreme Court’s ruling.

In Asia, where markets got their first chance to react to the court’s ruling, Hong Kong’s Hang Seng jumped 2.5 per cent, while South Korea’s Kospi rose a more modest 0.6 per cent. Markets in Japan and mainland China were closed for holidays.

In the bond market, the yield on the 10-year Treasury fell to 4.03 per cent from 4.08 per cent late Friday.

A top official at the Federal Reserve said Monday that it’s “a coin flip” on whether the Fed will cut its main interest rate at its next meeting in March or stand pat again.

The comments from Fed. Gov. Christopher Waller were a notable shift from January, when he was one of the two Fed governors to dissent against the central bank’s decision to hold its key rate steady after three rate cuts at the end of last year.

Lower rates would give the economy a boost, and Trump has been lobbying angrily for them. But they also could risk worsening inflation.

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Stan Choe, The Associated Press. AP Business Writers Matt Ott and Elaine Kurtenbach contributed.