Dow drops 332 points as Caterpillar, Eli Lilly slump; chipmakers rally on Trump’s tariff exemption
NEW YORK: U.S. stocks reversed early gains and closed lower on Thursday as renewed concerns over President Donald Trump’s tariff policy weighed on investor sentiment, with industrial and pharmaceutical shares leading the retreat.
The Dow Jones Industrial Average fell 332 points, or 0.8%, dragged down by a 2% drop in Caterpillar Inc (CAT.N) after the company warned of tariff-related headwinds. Earlier in the session, the blue-chip index had climbed more than 300 points.
The S&P 500 lost 0.3%, while the tech-heavy Nasdaq Composite also slipped 0.3%, giving back gains of over 1% seen earlier in the day.
Salesforce Inc (CRM.N) and other software stocks weakened in afternoon trading, following cybersecurity firm Fortinet’s (FTNT.O) forecast suggesting a smaller-than-expected product refresh cycle.
Pharmaceutical giant Eli Lilly (LLY.N) plunged 14% after late-stage trial results of its obesity drug disappointed investors, despite posting better-than-expected quarterly earnings and raising its full-year guidance.
Markets initially rallied after Trump announced a 100% tariff on imported semiconductor chips, exempting companies manufacturing in the U.S. Shares of Advanced Micro Devices (AMD.O) surged 5%, while the VanEck Semiconductor ETF (SMH.P) rose 1%.
Apple Inc (AAPL.O) gained 3% after unveiling plans to invest an additional $100 billion in U.S. suppliers over the next four years, building on its $500 billion commitment announced in February.
“The good news for companies like Apple is if you’re building in the United States … there will be no charge,” Trump said Wednesday in the Oval Office.
Despite the implementation of reciprocal tariffs, economic data including weekly jobless claims pointed to continued resilience in the U.S. economy. Analysts said the market remains focused on strong earnings and a firm macro backdrop.
“There’s a lot to digest around tariffs and trade,” said Anthony Saglimbene, chief market strategist at Ameriprise. “The market is just kind of concentrating on what it can discount right now.”
S&P 500 earnings are projected to grow 11% in Q2 year-over-year, nearly triple the 4% pace seen at June’s end, according to FactSet and Goldman Sachs.
Week-to-date, the S&P 500 is up 1.4%, the Nasdaq has gained 2.4%, and the Dow has advanced nearly 1%.
Market Summary Table
| Index / Stock | Change (%) | Key Driver / Note |
|---|---|---|
| Dow Jones Industrial | -0.8% | Caterpillar (-2%), Salesforce drag |
| S&P 500 | -0.3% | Broad weakness, earnings optimism |
| Nasdaq Composite | -0.3% | Software sector weakness, Fortinet forecast |
| Caterpillar (CAT) | -2.0% | Tariff concerns |
| Eli Lilly (LLY) | -14.0% | Disappointing obesity drug trial results |
| Advanced Micro Devices | +5.0% | Benefited from chip tariff exemption |
| Apple (AAPL) | +3.0% | $100B investment pledge in U.S. suppliers |
| VanEck Semiconductor ETF (SMH) | +1.0% | Sector-wide boost from tariff announcement |