The Nasdaq and the S&P 500 retreated from the record highs set at the end of holiday-shortened trading last week after President Trump said the US will impose a 25% tariff on imports from Japan and South Korea starting Aug. 1.

The Nasdaq slipped 0.9% to 20,408.07, the S&P 500 fell 0.9% to 6,222.24, and the Dow Jones Industrial Average slid 1.1% to 44,326.36 after midday on Monday. Aside from utilities, all sectors were in the red intraday, with consumer discretionary and energy as the biggest decliners.

Trump said on Truth Social that the 25% levy on imports from Japan and South Korea is separate from all sectoral tariffs, adding that goods "transshipped to evade a higher Tariff will be subject to that higher Tariff."

"This week with a light economic calendar, the focus of market participants is largely on trade policy," Stifel Chief Economist Lindsey Piegza said in a note Monday.

In company news, Tesla (TSLA) shares were down over 7% in recent Monday trading, leading the decliners in the tech-heavy Nasdaq, after news over the weekend that Chief Executive Elon Musk plans to launch a new political party called "America Party."

"Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the [company]," Wedbush Securities said in a note Sunday.

CoreWeave (CRWV) plans to acquire Core Scientific (CORZ) in a $9 billion all-stock transaction expected to close in Q4. Shares of CoreWeave dropped 2.7% and Core Scientific slumped 17%.

The US 10-year Treasury yield rose 4.7 basis points to 4.39%. The two-year rate rose 0.6 basis point to 3.89%.

The US Dollar Index was up 0.4% to 97.54.

West Texas Intermediate crude rose 1.4% to $67.91 per barrel.

Gold was down 0.2% to $3,335.40 per ounce, and silver declined 0.6% to $36.86 per ounce.