Wall Street’s main indices fell further on Tuesday as investors sold off positions to mitigate risks from the ongoing trade tensions among some of the world’s largest economies.
The Dow Jones fell the most during the trading session, losing 1.55 percent, while the S&P 500 declined 1.22 percent. The Nasdaq dropped by 0.35 percent.
Following the US imposition of a 25-percent tax on goods from Canada and Mexico on Tuesday, countries announced a promise to retaliate. Canada, as well as China, which received a 10 percent additional tax, immediately announced retaliation. Mexico is expected to follow suit.
The negative sentiment spilled over to 10 stocks, predominantly retailers, with the tariff threats seen to pose pressures on their profit margins. In this article, we have detailed the reasons behind their declines.
To come up with Tuesday’s worst performers, we considered only the stocks with $2 billion in market capitalization and $5 million in daily trading volume.
A man in long sleeves looking at stock market data. Photo by Tima Miroshnichenko on Pexels
10. Bank of America Corporation (NYSE:BAC)
Bank of America dropped its share prices by 6.34 percent on Tuesday—a second straight day—as investor sentiment was weighed down by its potential risks from the growing trade tensions between the US and its largest trading partners.
BAC traded in line with its counterparts on Tuesday, albeit it posted the largest losses among its peers.
With the economies throwing tariff retaliations, investors moved to park funds for now to mitigate risks. With BAC set to release its next earnings results in April next month, investors will be looking out for any cues on its provisions for credit losses (PCL), which could go higher with higher taxes now in place.
PCLs are funds that money lenders keep and are treated as their own expense to absorb delinquent debts that can no longer be recovered.
9. Delta Air Lines Inc. (NYSE:DAL)
Delta Air Lines dropped its share prices by 6.43 percent on Tuesday to close at $54.69 apiece, as investors parked funds to mitigate risks from the ongoing trade war’s impact on its business.
DAL’s decline was in line with its peers, with United Airlines losing 5.96 percent, Southwest Airlines decreasing 3.79 percent, American Airlines shedding 3.75 percent, and Alaska Air Group diving 6.58 percent, among others.
With President Donald Trump’s imposition of a 10 percent tariff on energy resources from Canada, the transportation and aviation sectors are among the industries expected to be heavily hit by higher fuel prices that would impact their profit margins.
In other news, DAL announced that it would reduce the frequency of roundtrip flights to Pocatello Regional Airport in Idaho to just one, citing low passenger numbers as the reason.
8. The Boeing Company (NYSE:BA)
Boeing saw its share prices decline by 6.56 percent on Tuesday to finish at $158.9 apiece as investors were parked for safety amid the ongoing trade war between the United States and its trading partners.
BA, one of the largest aircraft makers globally, could bear the brunt of higher prices in raw materials to manufacture its aircraft and, potentially, lower sales from the aviation industry that is set to be significantly impacted by rising gasoline prices.
With the tariffs now in place, this could drive customers to its largest competitor, Airbus, which is headquartered in the Netherlands.
Previously, BA Chief Executive Officer Kelly Ortberg said that any more tariffs could further hurt its sales in China, which is one of its largest markets.
Additionally, BA currently operates a composite parts factory in Canada, one of the countries facing US trade threats.
7. Smurfit Westrock Plc (NYSE:SW)
Smurfit Westrock declined for a second straight day on Tuesday, losing 6.81 percent to finish at $46.69 apiece as investors sold off positions amid the impact of the ongoing trade war on its business.
SW, a global paper-based packaging company that is present in 40 locations, including China, Canada, and Mexico, stands to be significantly hurt by higher prices of raw materials further aggravated by US tariffs.
In the fourth quarter of 2024, SW saw net income jump by 192 percent to $146 million from $50 million in the same period a year earlier, as net sales grew 163 percent to $7.539 billion from $2.862 billion.
For the full year of 2024 alone, however, net income fell by 61.3 percent to $319 million from $826 million in 2023, while net sales dived by 74.5 percent to $21.1 billion from $12.09 billion year-on-year.
6. International Paper Company (NYSE:IP)
International Paper Company dropped its share prices for a second consecutive day, losing 7.25 percent to end Tuesday’s session at $51.30 apiece.
The drop was in line with its counterparts as investors disposed of shares in manufacturing firms to minimize risks from the impact of tariff threats.
The trade threats followed IP’s leadership change announcement last week, where it welcomed Lance Loeffler as its new chief finance officer and senior vice president.
Throughout his more than 25-year career, Loeffler has worked in finance, strategy, and business leadership roles at UBS Investment Bank, Deutsche Bank Securities, and Halliburton, where he served as CFO for four years.
With higher taxes now posing a huge challenge to the manufacturing companies, Loeffler would take on the critical task of ensuring IP’s profitability amid a volatile economic environment.
5. V.F. Corporation (NYSE:VFC)
V.F. Corporation fell for a second day on Tuesday, losing 7.40 percent to close at $22.54 apiece as investors sold off positions to minimize risks from the ongoing trade war’s impact on its business operations.
The company, which designs, manufactures, and markets branded apparel such as The North Face, Timberland, Vans, Dickies, Jansport, and Kipling, among others, is set to bear the brunt of higher fees on importation, manufacturing, and raw materials caused by higher taxes as a result of the ongoing trade war.
VFC currently owns various facilities globally, including China, Mexico, and Canada, which all have been slapped with higher taxes by President Donald Trump.
Prior to trade threats, VFC earlier this year said that it was on track to deliver on its 2027 target of delivering a five-year compounded annual growth rate (CAGR) of mid-to-high single digits over the next five years and earnings per share to grow at a five-year CAGR of high single to a low double-digit percentage.
4. Affirm Holdings Inc. (NASDAQ:AFRM)
Affirm Holdings lost 7.84 percent of its value on Tuesday to close at $57.01 apiece following news that its director, Keith Rabois, disposed of a significant portion of his ownership in the company.
In a regulatory filing, Rabois said he sold a total of 16,088 shares of AFRM’s common stock at prices ranging between $61.73 and $66.40 apiece for a total amount of $1.03 million.
Following the sell-off, Rabois’s ownership in the company now stands at 61,520.
According to a report from Zacks Research, AFRM recently broke out above its 50-day moving average, suggesting a short-term bullish trend.
Zacks also gave AFRM a “strong buy” rating on expectations that it could be poised for a potential surge.
3. Wayfair Inc. (NYSE:W)
Wayfair Inc. saw its share prices dive by 8.14 percent on Tuesday to finish at $33.64 apiece, in line with the drop in retail stocks as a result of the ongoing trade war between the United States and its trading partners.
Sentiment was further aggravated by comments from Brian Cornell, chief executive officer of Target, one of the largest retailers in the US, saying in an appearance on CNBC that higher prices on Mexican goods will likely lead to higher prices on produce.
Wayfair, an online retailer of furniture, decorations, and outdoor items, among others, is similarly set to bear the brunt of higher costs.
Prior to President Donald Trump’s return to the White House, an analyst already warned last year that Wayfair, as well as Best Buy and Five Below, would be especially at risk from the tariffs which could result in a plunge in earnings performance.
2. KKR & Co. Inc. (NYSE:KKR)
KKR & Co. dropped its share prices by 9.19 percent on Tuesday to end at $120.78 apiece as investor sentiment turned cautious over the company’s planned $1.5-billion mandatory convertible preferred stock offering.
In a statement, KKR said it has commenced offering 30 million of its Series D Mandatory Convertible Preferred Stock with a par value of $0.01 per share.
The company said it intends to use the net proceeds for the acquisition of additional equity interests in core private equity portfolio companies reported in its Strategic Holdings segment and for other general corporate purposes.
In usual cases, the offering of mandatory convertible preferred stock can result in the dilution of existing shares as the conversion would increase the total number of outstanding shares, thereby disappointing investors.
1. Best Buy Co. Inc. (NYSE:BBY)
Best Buy took a battering on Tuesday, losing 13.30 percent to finish at $75.20 apiece as investors sold off positions following its CEO’s pessimistic outlook, saying that prices for US consumers would rise as tariffs on China and Mexico officially took effect.
During BBY’s earnings call, CEO Corie Barry said that the company expects its vendors across all segments to pass along some level of tariff costs to retailers.
This, she said, would make price increases for American consumers “highly likely.”
She added that BBY directly imports 2 to 3 percent of its products and that the company is now reviewing and evaluating supply chain sources.
“The giant wild card here, obviously, is how the consumers are going to react to the price increases, in light of a lot of price increases potentially throughout the year and a general consumer confidence that is showing a little signs of weakness at the moment,” added BBY CFO Matt Bilunas on the call.
While we acknowledge the potential of BBY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BBY but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
