Stocks dropped Monday as President Trump said 25 percent tariffs on most Canadian and Mexican goods and an additional 10 percent tariff on Chinese goods would take effect on Tuesday, the outcome investors dreaded. The Dow Jones industrial average fell 1.5 percent, the S&P 500 lost 1.8 percent, and the Nasdaq dropped 2.6 percent. US bond yields, the dollar and oil prices all declined.

Stocks were already lower after a weaker than expected Institute for Supply Management report on manufacturing business for February, which showed the chilling effects of Trump's tariffs ahead of their imposition in March. The ISM report and disappointing construction spending figures spurred some forecasters to predict outright contraction in GDP in the first quarter. The Atlanta Fed's GDPNow model sees GDP contracting at a 2.8 percent rate in the first quarter, down from an already gloomy 1.5 percent contraction in the last forecast.

Technology stocks had an especially bad day with Nvidia leading the declines amid concern about new restrictions on sales of advanced semiconductors to China. Intel tanked too, and megacaps Apple, Microsoft, Amazon and Tesla got whacked.

Among sectors, in addition to technology, worst performers were energy, consumer discretionary, industrials, and communications services. Holding up best were defensives, real estate, consumer staples, and health care.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.