U.S. stocks face a tenuous moment with the arrival of President Donald Trump's latest tariffs. The benchmark S&P 500 is down about 5% from its February 19 all-time closing high as a series of weakening U.

A private survey showed American factory activity last month edged closer to stagnation—slowing growth combined with faster inflation—as new orders and employment contracted. A gauge of prices paid for materials jumped to the highest since June 2022. So how should investors react to all this smoke on the horizon?

Stocks fall sharply Monday, extending declines in late afternoon trade as President Donald Trump affirmed 25% tariffs on imports from Canada and Mexico will take effect. Earlier, stocks felt pressure after a weaker-than-expected February reading for a key manufacturing index.