Wall Street stocks experienced a sudden dip last week, leading to a flurry of activity from investors and analysts. This is the result of the uncertainty created by Trump’s tariff policy, which has affected businesses of all sizes and in almost every industry.

After the initial shock, the investors started taking advantage of the dip and buying the stocks while they were low in the hope that they’d recover eventually. This is a common tactic in investing, and experience shows that in the long run, it almost always works.

The Dip

 Shares of Tesla (TSLA.O) dropped 5.6%, and General Motors (GM.N) lost 3.1%. This is due to the uncertainty the industry is facing when it comes to the scale and purpose of Trump’s tariffs on the auto industry.

Chipmakers Nvidia (NVDA.O) slid almost 6%, and Broadcom (AVGO.O) fell almost 5%, pushing the PHLX chip index (.SOX) down 3.3%.

The S&P 500 declined 1.12% to end the session at 5,712.20 points. The Nasdaq declined 2.04% to 17,899.02 points, while the Dow Jones Industrial Average declined 0.31% to 42,454.79 points.

The volume of trade in the US stock exchange also dropped to 15.5 billion shares traded compared to the usual 20 billion.

Investor Reactions

Investors have had an interesting reaction to this sudden change. It’s also noticeable that the investors are acting differently based on the size of their portfolio and their assets. Small and mid-size investors are changing their usual approach, and they are not buying the dip.

Whale investors, on the other hand, are doing just that and taking advantage of the opportunity. Dip-buying has been effective for the past two years. There has been a period of 370 days without a sell-off lower than 2.1%, meaning that the markets have shown they can recover.

The Crypto Market

The cryptocurrency market is also experiencing a dip for both Bitcoin and the major altcoins. This dip came about much faster than expected based on the usual Bitcoin cycles. Some claim that this is because the introduction of ETFs has changed the Bitcoin market.

A similar response has taken place in this market as well. All investors are buying the dip, as it’s a smart investment move. It’s noticeable that small and mid-size investors are increasingly using the recommended website tools and trying to analyze the market. Whales, on the other hand, buy cryptos in large amounts, as they are best suited to take advantage of sudden changes.

Crypto investors are using a variety of AI tools to analyze the changes in the market and predict the outcomes. The stream of data is fed into the online tools, and they showcase how the crypto prices will change based on previous performance.

What has caused the Dip?

Dips in the market, such as the ones we’re witnessing, are almost always caused by uncertainty. If there are unforeseen risks in the market, the businesses tend to get scared, and a ripple effect takes place. Trump’s tariffs caused the scare because it’s not easy to predict how long they will last and how many industries they will affect.

Tariffs will cause prices to rise as businesses will simply pass the additional cost to the consumers, and a further rise in inflation will cause small-time investors to emphasize saving rather than investing.

Not all Stocks are falling

Not all stocks are affected by the changes in the market, and some have actually risen during the dip. For instance, Dollar Tree rose 3.1%. This doesn’t have anything to do with the dip, as it’s a result of the announcement that the business will soon be sold to a consortium of private equity investors for about $1 billion.

Game Stop also rose by as much as 12% after the company voted to incorporate Bitcoin as a treasury reserve asset. It shows that the overall trust in Bitcoin is still high.

S&P 500

Some have doubts about how important the S&P 500 is as a representative of the whole market, but it’s still the most common way for investors to diversify and gain incremental profits over time. It entered its first correction in October 2023. The loss was over 10%.

Just a few weeks ago, the S&P 500 was at a record high, which shows how quick the decline is and how risky the markets can be.

To Sum Up

The stock market has experienced a sudden dip due to the tariffs on foreign goods introduced by President Trump. The same has happened in the crypto market, which is acting differently than anyone anticipated; the dip came earlier than expected.

Small and mid-sized investors are starting to take advantage of this by buying the dip and, in the case of crypto markets, using the latest tools to do so. Whale investors, however, were the first to take advantage of the opportunity.