The positive vibes that sparked a three-day win streak for stocks faded Wednesday, with all three main benchmarks ending the day in the red. Technology led the path lower, though consumer discretionary wasn't far behind as auto stocks tumbled on fresh tariff news.
At the close, the blue chip Dow Jones Industrial Average was down 0.3% at 42,454, the broader S&P 500 had shed 1.1% to 5,712, and the tech-heavy Nasdaq Composite had plunged 2.0% to 17,899.
Among the mega-cap stocks applying significant pressure to the Nasdaq were chipmakers Nvidia (NVDA, -5.7%) and Broadcom (AVGO, -4.8%) and electric vehicle maker Tesla (TSLA, -5.6%).
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Elsewhere, General Motors (GM, -3.1%) and Stellantis (STLA, -3.6%) closed lower after the White House confirmed that President Donald Trump will make an announcement on auto tariffs after today's close.
Tariffs will remain top of mind for investors through at least next Wednesday, April 2, which Trump has dubbed "Liberation Day." Specifically, it is when the administration will announce a series of reciprocal tariffs.
As such, market participants will likely remain on tenterhooks for the time being as "policy uncertainty lingers," says Daniel Skelly, head of Morgan Stanley's Wealth Management Market Research & Strategy Team.
Skelly adds that "next week's tariff deadline will likely be more of a starting point for negotiations than a conclusion, so the market may struggle to recover in a straight line higher."
Dollar Tree pops on Family Dollar sale
Not all of the day's action was to the downside, though. Dollar Tree (DLTR), for one, jumped 3.1% after the discount-store chain said it is selling its underperforming Family Dollar segment to a group of private investors for $1 billion – a massive discount to the $9 billion it paid for the business in 2015.
The company also disclosed its fourth-quarter earnings report, which showed a sharp drop in revenue vs the year prior, though it sees top-line growth stabilizing in fiscal 2025.
Ahead of earnings, UBS Global Research analyst Michael Lasser (Buy) said sentiment toward DLTR had become too negative due to "the string of downward estimate revisions, questions about the positioning of the dollar stores and concerns about the impact of tariffs."
He also cited uncertainty over the company's plans for Family Dollar. This created a risk-reward that was "heavily skewed toward the upside," he added – which may explain why DLTR was one of the best-performing S&P 500 stocks today.
GameStop shocks Wall Street
Elsewhere on the earnings calendar, GameStop (GME) soared 11.7% after the video game retailer said Q4 net income more than doubled on a year-over-year basis to $131.1 million.
Wall Street was also pleasantly surprised by a separate announcement that indicated GameStop's board of directors approved adding bitcoin as a treasury reserve asset.
The company admits that using cash or future debt to buy bitcoin may cause the value of its investment portfolio to decline given that the cryptocurrency is a "highly volatile asset and has experienced significant price fluctuations over time." However, it adds that it will continually examine "the risks and rewards" of its strategy.
"GameStop impressed us with a rare operating profit for its holiday quarter," says Wedbush analyst Michael Pachter. As for the company's bitcoin strategy, Pachter notes these investments could impact its interest income, though it's unlikely to rock the boat too much in the near term.
Pachter has an Underperform (Sell) rating on the meme stock but lifted his price target to $11.50 from $10. For reference, GME closed Wednesday at $28.36.
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