Stocks fell again on Monday following yet another negative trading week for Wall Street, as investors receive little signs of progress on global trade talks. The Dow Jones Industrial Average traded 366 points lower, or 0.9%. The S&P 500 shed 1.1%, and the Nasdaq Composite lost 1.4%. The moves come after each of the three major averages logged a third weekly decline in the last four trading weeks. While the S&P 500 closed out Thursday’s session higher, the broad market index still finished the holiday-shortened week 1.5% lower. The Dow Jones Industrial Average and Nasdaq Composite posted their third consecutive losing session, each finishing the week with a more than 2% pullback for the four-day period. U.S. markets were closed on Friday in observance of Good Friday. Heightened concern surrounding President Donald Trump’s tariffs have weighed on Wall Street recently. The major averages are down around 7% since April 2, when Trump announced a raft of levies on imports from other countries. Over the weekend, Chicago Federal Reserve President Austan Goolsbee said in a CBS interview that the tariffs could lead U.S. economic activity to “fall off” by the summer. That follows Fed Chair Jerome Powell expressing concern Wednesday that the president’s levies could present difficulty for the central bank in controlling inflation and spurring economic growth. Questions around the Fed’s independence have also hurt stocks. Trump on Thursday called on the Fed to cut interest rates, even hinting at Powell’s “termination.” On Friday, White House economic advisor Kevin Hassett said that the president and his team were studying whether firing Powell was an option. Investors are dealing with “with a fresh source of macro anxiety: Trump’s threats to Fed independence,” wrote Adam Crisafulli of Vital Knowledge. “This threat is related to Trump’s trade war as Powell and his colleagues are forced to stay on the sidelines due to the prospect of a tariff-induced inflation spike over the coming months despite recent market volatility and rising downside growth risks.” There was no news of progress on any trade deals over the weekend, hurting investor confidence as Monday trading kicked off. If anything, tensions seemed to increase with China with the country warning other nations not to strike any deal with the U.S. that would hurt China. “The concurrent slump in stocks, the USD, and Treasuries suggests Trump’s trade war has set in motion an exodus from American financial assets that no amount of negotiating can reverse,” Crisafulli wrote. The dollar index dropped more than 1% to 98.13. That move sent gold prices to fresh record highs. Futures tied to the precious metal were up 2.4% above $3,400 per ounce. A nearly 6% decline in Nvidia last week also put pressure on the broader market. The artificial intelligence darling disclosed Tuesday that it will record a quarterly charge of about $5.5 billion due to controls around exporting its

Global markets have been shaken to their core by President Donald Trump’s aggressive trade agenda — and despite his promise of a “new golden age of America,” the long-held appeal of US investment is starting to lose its luster. Trump’s tariffs have been a catalyst for the end of an era of US exceptionalism, analysts say, and a dent to the image that US markets are the premier place to invest with unrivaled performance. His trade war has clouded business decisions and disrupted forecasts for economic growth. CEOs have slashed guidance and Wall Street banks have cut their year-end targets for the S&P 500. Bank of America’s latest global fund manager survey showed the largest number of global investors on record intending to decrease their holdings of US stocks since data collection began in 2001. Seventy-three percent of respondents said they think US exceptionalism has peaked. The Trump administration’s trade policy has raised concerns about US economic growth and caused global investors to rethink their allocation to US assets, Arun Sai, senior multi-asset strategist at Pictet Asset Management, told CNN. “Even if there is a steady de-escalation from here, the damage is done,” Sai said. “There is no putting the genie back in the bottle.”

Global markets in focus

The US stock market has long been the gold standard. The S&P 500 has steadily outperformed its counterparts in Europe and Asia for the past 15 years, according to FactSet data. Yet the S&P 500 is down 10% this year and on track for its worst month since 2022. Investors are well aware that the landscape has changed tremendously since the benchmark index soared 23% across last year. There have been three catalysts that have shifted focus away from America and toward investing overseas, according to Alessio de Longis, head of investment solutions at Invesco. In January, DeepSeek’s low-cost, ChatGPT-like artificial intelligence model caught Silicon Valley by surprise and challenged the narrative that the US had outright dominance in AI. In February, a shift in US foreign policy toward less support for Ukraine spurred defense spending in Germany, a boon for economic growth and investing in Europe. And Trump’s haphazard approach to tariffs in March and April was the third nudge for investors to look at other markets, according to de Longis. “The relatively erratic and unpredictable communication strategy around tariffs, as well as the initial shock of the amount of tariffs that were being threatened across the world provided another impetus for US underperformance,” de Longis said. In the past three months, de Longis said his investment strategy has shifted from overly-focused on US stocks in favor of a balance between US and European stocks. The latest survey from the American Association of Individual Investors showed that for the past eight weeks, more than 50% of respondents have been bearish on the US stock market. Jason Blackwell, an investment strategist at Focus Wealth Partners, said it has likely been 15 years since a client has asked to increase their allocation to international stocks. “That’s been a pretty consistent call that we’ve gotten over the last couple of weeks,” Blackwell said. “So, there’s definitely interest there again.” Blackwell said the advent of DeepSeek and the prospects for more growth in Europe caught investors’ attention. “Add in the tariffs on top of that, and add in this de-globalization trend, and I think you had a series of events that really had investors rethinking their international exposures and rebalancing a bit from where they have been over the last 10 years,” he said. Heading into this year, the US accounted for about 25% of global GDP and 65% of global stock market value, according to Barclays. “For nigh on 20 years, the US has benefited from almost relentless flows into USD financial assets,” said Ajay Rajadhyaksha, an analyst at Barclays, in a recent note. “Perhaps we were primed for some give-back … and a bunch of things have changed elsewhere.” “Europe has finally bought in to the idea of large fiscal stimulus,” Rajadhyaksha said. “At least from a narrative standpoint, there seem to be some alternatives for international investors heavily over-exposed to the US.” Rajadhyaksha also said that businesses in China have made “impressive strides” in technology beyond DeepSeek, noting that there have been breakthroughs by Huawei and electric vehicle company BYD, which rivals Tesla in the global market. The Chinese government has also recently embraced its private tech sector.

Shaken confidence

Bank of America’s fund manager survey in April showed 49% of respondents think the global economy is on track for a “hard landing,” up from 11% in March. Gold has soared almost 27% this year, smashing through record highs as investors flock to safe haven assets. The most crowded trade in April was gold, according to Bank of America’s survey, breaking a two-year streak of the most crowded trade being the Magnificent Seven tech stocks. Meanwhile, the US dollar has broadly weakened this year, a potential sign of waning investor confidence in the US. The US dollar index, which measures the dollar’s strength against six major foreign currencies, recently posted its worst week since 2022. The Euro last week hit its strongest level against the dollar in over three years. “We have previously argued that exceptional US asset return prospects are responsible for the dollar’s strong valuation,” analysts at Goldman Sachs said in a recent note. “If tariffs weigh on US firms’ profit margins and US consumers’ real incomes, like we think they will, they can erode that exceptionalism and, in turn, crack the central pillar of the strong dollar.” Krishna Guha, vice chairman at Evercore ISI, said in a note that “recent market action shows a loss of confidence in Trump economic policy,” citing higher Treasury yields and a weaker dollar. Trump’s yearning for a domestic manufacturing renaissance portends to disrupt the global economy — a deeply intertwined system where the United States has enjoyed the center stage. The Trump administration’s adamance on changing the international trading system and global economic order has likely contributed to fewer inflows to US assets, according to Pictet Asset Management’s Sai. While the US stock market remains a viable place to invest for the long term, Sai said, investors are seeking out stocks overseas to diversify their portfolios. JP Morgan is forecasting a 60% chance of a global recession this year. “If you’re a European investor, you will now think twice about allocating strategically to the US,” Sai said. “The S&P 500 is no longer the only game in town.”

Stock markets around the world have been relatively settled this week after a period of chaos, sparked by US trade tariffs.

But investors are still closely watching a part of the market which rarely moves dramatically – the US bond market.

Governments sell bonds – essentially an IOU – to raise money for public spending and in return they pay interest.

Recently, in an extremely rare move the rate the US government had to pay on its bonds rose sharply, while the price of bonds themselves fell.

The volatility suggests investors were losing confidence in the world’s biggest economy.

You may think it’s too esoteric to bother you, but here’s why it matters and how it may change President Trump’s mind on tariffs.

When a reporter asked President Donald Trump why he paused country-by-country tariffs only a week after unveiling them, Trump said “Well, I thought that people were jumping a little bit out of line. They were getting yippy, you know? They were getting a little bit yippy, a little bit afraid.”

Trump’s April 9 explanation came a day after the S&P 500, a broad stock market gauge, fell to 19 percent below its most recent peak, which had come in mid-February.

Americans with investments, retirement savings or pensions reliant on the stock market were feeling the squeeze of that decline. But economists and other financial observers suspected that the stock market decline may not have been the most important factor pushing Trump to pause these tariffs.

The likelier culprit: the bond market.

In February 1993, Democratic political strategist James Carville offered The Wall Street Journal a timeless characterization of the bond market’s influence:

“I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter,” Carville, an adviser to then-President Bill Clinton, said. “But now I want to come back as the bond market. You can intimidate everybody.”

Economists agree that the bond market profoundly shapes the U.S. and global economies. Here are some questions and answers about how it works, and why Americans should care.

What is the bond market?

“The bond market” refers to the market for U.S. government bonds, which range in maturity from one-month Treasury bills to 30-year Treasury bonds. A bond “allows one party to borrow from another and then repay the loan on pre-specified terms,” said Anastassia Fedyk, an assistant professor of finance at the University of California-Berkeley’s Haas School of Business.

Anyone can purchase bonds. If you hold a bond to its maturity, its interest rate remains at the rate that was established when it was issued; this is considered a relatively safe and stable strategy, because you know going in what you will get in the end.

But you can also sell bonds before they mature, to take advantage of other investors’ financial needs at a given moment. Depending on market conditions, you could end up selling a bond for less than it’s denominated for — that is, less than its face value in dollars plus its interest rate — or you could end up selling it for more than that.

The market for bonds depends on two key metrics. One is the price, which is what someone will pay to buy a bond that hasn’t yet matured. The other is the yield, which is the bond’s return on your investment.

As the price you pay for a bond goes up, its yield will go down. Mathematically, this makes sense: You are paying more for the bond, so what you make off the bond will go down. Alternatively, if you are paying less for a bond, the yield will go up.

“A basic law of finance is if you don’t want to buy a bond, the seller has to lower its price to make it attractive to you,” said Moshe Lander, a senior lecturer in economics at Concordia University. “And when that happens, the yield goes up. You have to entice someone with a better return.”

Why is the bond market so important?

When bond yields rise, the cost of every other type of borrowing — credit cards, mortgages, business loans, financing the federal debt — increases.

That’s because historically, U.S. Treasury bonds have been considered the marketplace’s safest investments. For decades, the U.S. government has been big, stable and reliable. In a worst-case scenario, it’s a sovereign entity that can print money to pay off its debts (though not without negative economic consequences, notably inflation).

Compared with the federal government, every other bond issuer or lender — states, cities, corporations, banks and other financial institutions — is a little, or a lot, riskier. So their interest rates are always higher than the federal government’s. And if the federal government’s interest rates rise, the interest rates for these other institutions will rise, too.

“When it becomes more costly for the government to borrow, it also gets more costly for firms and households to borrow,” said Joseph Steinberg, a University of Toronto associate professor of economics.

This is a problem for the broader economy. Higher borrowing costs make it harder for companies to invest and expand, and make it harder for consumers to pay for the things those companies produce, from groceries to appliances to new homes. This can become a vicious cycle.

Higher interest rates also add to the federal government’s debt load. In this scenario, newly issued federal bonds, which are used to finance the federal government’s debt, will need to have a higher interest rate. This means the government will have to pay more for every dollar it borrows going forward, and these higher interest payments risk crowding out other priorities the government wants to spend money on, from Social Security benefits to military salaries.

What happened to the bond market recently?

After Trump’s tariff announcement on April 2 — a plan that many investors saw as more far-reaching than they’d expected — a lot of investors chose to sell off U.S. government bonds.

These investors sold their bonds because they saw increased “risk and uncertainty” for the U.S. economy in a higher-tariffed future, Fedyk said. “This pushed bond prices lower, and yields higher,” she said. “The change was pretty dramatic, with 10-year yields going from under 4 percent all the way to 4.5 percent on April 8.”

Investors’ declining confidence in the U.S. economy portended a future in which both U.S. government bonds and other types of lending would see higher interest rates, which would have a negative impact on the economy.

But the hurt didn’t stop there, finance experts say. “What’s going on now suggests that the U.S. government has lost its appeal as a source of safe assets,” Steinberg said.

Steinberg said an economic downturn “is usually associated with a drop in bond yields,” not an increase. That’s because in times of uncertainty, parking money in the U.S. — and in U.S. bonds in particular — is seen as safer than the alternatives. This drives up demand for U.S. bonds, meaning higher prices — and lower yields.

The opposite was happening after Trump announced his tariffs.

If the U.S. had been looking like a strong economy in the months and years ahead, “yields should be coming down,” Lander said. “If they’re going up, that suggests that inflation and risk are rising.”

Trump’s moves “spooked the market,” Lander said.

Did Trump’s 90-day pause reassure investors?

In the April 9 announcement, Trump paused the specific tariffs his administration had calculated for virtually every country, though he kept in place a standard 10 percent tariff on every foreign product; he also kept existing tariffs on Canada and Mexico in place and raised tariffs on China.

Despite his announcement, “it doesn’t appear that the 90-day pause has done much to reassure investors,” Steinberg said.

The yield for five-year Treasury notes fell between mid-February and Trump’s April 2 announcement — a favorable development for the U.S. Then, from April 2 to April 9 — the day he announced the 90-day pause — the yield for the five-year note rose. Its yield peaked on April 11, then proceeded to fall through April 14, but only to a level that was still well above its pre-April 2 level.

“There is still a lot of uncertainty remaining, including what will happen at the end of the 90 days and how the trade war with China will evolve,” Fedyk said.

A heavy slate of U.S. company results in the coming week will test a stock market shaken by a U.S. trade policy overhaul that upended the outlook for the global economy and corporate America.

Investors remain on edge after President Donald Trump’s sweeping April 2 tariff announcement stunned markets and sparked some of the most volatile trading since the onset of the COVID-19 pandemic five years ago.

After rebounding somewhat last week, the benchmark S&P 500 (.SPX), opens new tab stock index fell this week and was down 14% from its February record high. Volatility levels moderated from five-year peaks but remain elevated by historic measures.

Tesla (TSLA.O), opens new tab and Google parent Alphabet (GOOGL.O), opens new tab – two of the so-called Magnificent Seven megacap companies whose shares have faltered after two years of stock leadership – are among those closely watched for financial results as investors seek guidance about the fallout from tariffs that are very much in flux.

“The view of the CEOs going forward has never been more important,” said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade.

It may seem like a bad time to invest in the stock market due to the uncertainty ahead, but it may actually be a no-brainer to do so right now. While the S&P 500 (SNPINDEX: ^GSPC) is down roughly 10% in 2025 as of Thursday’s prices, historically, it has risen in value.

The index is designed to track 500 of the best publicly traded stocks on the market. And by investing in exchange-traded funds (ETFs) that track the broad index, long-term investors have an easy way to benefit from the market’s growth over the years.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Here’s how you can easily invest in an S&P 500 ETF, and why you should consider doing so today.

An easy way to track the index

There are many ETFs available that can help you track the S&P 500. One of the most popular options is the SPDR S&P 500 ETF (NYSEMKT: SPY). It has a low expense ratio of 0.09%, and its total returns (which include dividends) over the past 10 years have been nearly identical to those of the index.

^SPX data by YCharts

As you can see, investing in the ETF over the long haul has allowed investors to generate some great returns, while enjoying a lot of diversification and taking on minimal risk. A $10,000 investment in the fund over this time frame would have grown to some $30,000 — and that’s even when you factor in the market’s decline this year.

But often, when prices rise too quickly, market forces can bring them down back to reality.

Were stocks overdue for a decline?

The S&P 500 has historically averaged annual returns of around 10%. That’s just an average, however, and there will be both good and bad years mixed in along the way. For example, in 2024 and 2023, the index rose by more than 20% — well above its long-run average. And that propelled it to a higher-than-typical valuation.

President Donald Trump on Thursday again made clear his disdain for Federal Reserve Chair Jerome Powell, going so far as to say the central banker’s “termination can’t come fast enough” and saying in an Oval Office event that Powell will “be out of there real fast” if he wants.

While many experts say the president does not in fact have the power to fire the Fed chief due to policy differences, Trump has made clear he’s willing to break with norms and precedent, even in the face of potentially monumental repercussions.

Regardless, the leading contender to lead the US central bank under Trump, whether at the end of Powell’s term in May 2026 or earlier, reportedly appears to be Kevin Warsh, a former Fed governor who previously was under consideration to be Trump’s Treasury secretary for the president’s second term and was a candidate for the top job at the Fed during Trump’s first term.

CNN previously reported that Warsh was again on Trump’s shortlist to become Fed chair this time around, once Powell’s time is up. In fact, Trump’s selection of Scott Bessent to lead the Treasury Department was seen by many as a way to leave Warsh open for an eventual appointment as Fed chair.

Treasury Secretary Scott Bessent told Bloomberg earlier this week that the administration will start interviewing candidates for Powell’s successor “sometime in the fall.” And with speculation swirling over whether Trump will try to oust Powell before his term ends, Bessent said that “monetary policy is a jewel box that’s got to be preserved.”

But who is the man who might soon lead one of the world’s most powerful financial institutions?

The man who could be the next Fed chair

Warsh, 55, was a vice president and executive director at Morgan Stanley in the company’s mergers and acquisitions division before serving as a special assistant to then-President George Bush for economic policy and as executive secretary at the National Economic Council.

Like Powell, Warsh does not have a graduate degree in economics. He graduated from Harvard Law School in 1995.

Bush appointed Warsh to the Fed’s Board of Governors in 2006, where he served during the height of the Great Recession as chief liaison to Wall Street.

In that role, he helped coordinate the sale of Bear Sterns to JPMorgan Chase. But he also allowed Lehman Brothers to go under in 2008, a watershed moment for global financial markets. Warsh resigned from the Fed in 2011 after publicly voicing his opposition to the central bank’s plan to buy $600 billion worth of bonds to inject more money into the economy.

More recently, Warsh advised Trump’s transition team on economic policy after the November election. In a January opinion piece in The Wall Street Journal, he joined Trump in criticizing the Fed for letting inflation rise sharply during and after the pandemic.

Warsh currently serves as a distinguished economics fellow at the Hoover Institution, a conservative think tank; and is a visiting scholar at Stanford University’s Graduate School of Business.

Additionally, he is a member of the nonpartisan Congressional Budget Office’s panel of advisers. He is married to billionaire Jane Lauder, granddaughter of Estée Lauder, the late cosmetics industry mogul.

His views on economic events and the Fed

In his Wall Street Journal op-ed, Warsh wrote that high inflation rates over the past few years arose from “a government that spent too much and a central bank that printed too much.” However, most mainstream economists attribute inflation’s eruption in 2021 mostly to pandemic-induced shocks to demand and supply.

Warsh wrote that “the Fed should steer clear of political prognostications, not just in word but in deed,” pointing to minutes from a Fed meeting last year indicating officials believed Trump’s proposed policies could fuel inflation.

In an interview with Fox Business ahead of the Fed’s latest policy meeting last month, Warsh said the turmoil sparked by Trump’s tariff war indicates an economy that “is transitioning.”

“The president inherited a fiscal and economic and regulatory mess, and it’s going to take a little digging out to be on a stronger platform for growth,” he said. “Rome wasn’t built in a day, so this will take some time.”

When asked about the likelihood of Trump’s tariffs stoking inflation, Warsh said that “inflation is a choice, and the Fed has made a lot of bad choices over these last several years.”

“The president has to take matters into this own hands and try to kill inflation by reducing government spending,” he said.

What was a massive rally on Wall Street turned into yet another sizeable decline.

Cheap stocks and hope for signs of trade negotiation sent markets surging Tuesday morning — but that relief rally evaporated as the White House said it would levy enormous tariffs on China.

US stocks tumbled solidly into the red in the afternoon. The Dow fell 320 points, or 0.84%. The broader S&P 500 fell 1.57%. The tech-heavy Nasdaq Composite slid 2.15%.

The S&P 500 closed at its lowest level in almost a year. The Dow and Nasdaq both closed at their lowest level since January 2024.

Markets fell because President Donald Trump is set to impose an additional 84% in levies across all Chinese imports on Wednesday, White House Press Secretary Karoline Leavitt announced Tuesday. That will mean all goods from the country are subject to a tariff of at least 104%.

The S&P 500 and Nasdaq, which had surged as much as 4% and 4.5%, respectively, Tuesday morning, tumbled midday as Leavitt spoke to reporters. The loss for the Dow comes after the blue-chip index surged as much as 3.85% on Tuesday morning.

At its lowest point of the day, the S&P 500 briefly dipped into bear market territory (down 20% from its record high in February) before pulling back and closing down 18.9% from that peak. It’s the second day in a row the S&P 500 has flirted with bear territory.

Meanwhile, the Nasdaq, firmly in a bear market since Friday, closed down 24.3% from its record high in December. The Dow closed down 16.4% from its record high in December.

“We’re not anywhere out of the woods yet, and so that sort of tempers things,” said Thomas Martin, senior portfolio manager at Globalt Investments.

Wall Street’s fear gauge, the VIX index, surged higher Tuesday after spiking to historic levels the past two sessions, reflecting jitters among traders. “Extreme fear” was the sentiment driving markets, according to CNN’s Fear and Greed index.

Wall Street was poised for a rally

After markets plunged over the course of the past three trading sessions, Wall Street investors were looking for any excuse to catch their breath ahead of the planned tariff escalation at midnight — but Trump’s hefty tariffs on China were a reminder that reprieve can be fleeting.

Over the course of the past few days, stock prices got absolutely hammered as Wall Street grew fearful that Trump’s tariff policy would plunge the US and global economies into a recession. After three days of market carnage, investors appeared to be seeking some buying opportunities.

One measure of the price-to-earnings ratio of S&P 500 companies closed below 17 Monday — historically cheap, giving investors a chance to scoop up stocks they believe might be oversold.

“This is a very normal action and very technical in nature after a shock period,” said Truist’s Keith Lerner. “The market is extremely oversold, and markets don’t move in a linear fashion.”

Lerner noted that historic market rebounds tend to be clustered in with massive declines, as investors with FOMO worry they could miss out on a rally.

“In a period of uncertainty, each bit of new information is overextrapolated, which leads to wider-than-normal-swings,” Lerner added.

That explains why a bit of fake news Monday that Trump was considering a tariffs pause — immediately batted down by the White House — sent stocks temporarily surging. That gave markets a taste for what could happen if some nations begin to make progress in negotiating lower tariffs.

“Yesterday market players saw how the hint of ‘good news’ — in that case it was chatter about a pause in the Liberation Day tariffs — could rally markets by whole percentage points very quickly,” Michael Block of Third Seven Capital said in a note to investors. “Even though that proved to be all smoke, traders are now poised for the fire – that is, real news.”

Markets were coiled for a rebound

Investors have been on edge for any updates from the White House that might signal Trump is negotiating his trade policy.

White House National Economic Council Director Kevin Hassett said Tuesday on Fox News that the administration is managing “a massive number of requests for negotiations” from nations and that Trump is prioritizing “two of our closest allies and trading partners,” Japan and South Korea.

Earlier on Tuesday, Trump posted on social media that he had “a great call with the Acting President of South Korea.” On Monday, Trump spoke with Japan’s Prime Minister Shigeru Ishiba, who will be sending a team to visit Washington to negotiate a trade deal.

“(Traders) are peeking around every corner looking for even the slightest whiff of a trade deal or movement on the tariff front,” said Jamie Cox, managing director at Harris Financial group. “The market is wound up for a face-ripping rally.”

Across the Atlantic, The European Union’s executive arm said the bloc is prepared to negotiate with the United States over buying more of its liquefied natural gas. It’s a response to a grievance raised Trump, who has said the EU must buy around $350 billion worth of American LNG to compensate for the deficit the US has in goods trade with the bloc.

US Trade Representative Jamieson Greer said Tuesday during a routine hearing before the Senate Finance Committee that the administration is in talks with about 50 countries and that they’re trying to address some non-tariff related measures, such as foreign countries’ regulations that impede US exports.

Greer reaffirmed that Trump’s massive reciprocal tariffs will go into effect Wednesday.

“We will have the president’s plan go into effect, and we’re coupling that with immediate negotiations with our partners,” he said.

High-stakes game of chicken

Markets tried to rebound Tuesday before sliding. It’s a reminder that there’s no guarantee stocks will remain buoyant.

After imposing across-the-board 10% tariffs on virtually all products coming into the United States Saturday, the Trump administration is set to impose significantly steeper levies still on dozens of countries. Those tariffs, which Trump has called “reciprocal,” although they are no such thing, amount to as much as 50% for a handful of countries.

China’s Commerce Ministry on Tuesday said the country would “fight to the end” of the trade war and would continue to stand up to Trump.

The escalating trade war between the two largest economies is turning into a high-stakes game of chicken. China has squashed deals that Trump wants — including a US company taking control of ports on both sides of the Panama Canal and a deal to sell TikTok to a US-based company. Both countries’ economies would be hurt in a trade war — and given the massive trade imbalance with the United States, China could very well be hurt worse.

So investors hopeful for a deal may not get one. And if they don’t, a damaging trade war could bring down both economies — and markets along with them.

Recession fears

Any escalation of the trade war would probably lead to a US and global recession this year, multiple Wall Street banks have said over the course of the past week, including Goldman Sachs and JPMorgan Chase. That could continue to sap demand for stocks.

Although the current bounce back may be short-lived, some in the Trump administration were already declaring victory.

“It’s finding the bottom now. It’s finding the bottom now,” Trump’s top trade adviser Peter Navarro said about the market Monday evening on Fox News. “It’s going to shift over and it’s going to be companies in the S&P 500 who are the first to produce here. Those are the ones going to lead to recovery. And it’s going to happen. Dow 50,000. I guarantee that and I guarantee no recession.”

Navarro’s optimism wasn’t matched by JPMorgan Chase CEO Jamie Dimon, who warned in his annual letter to shareholders Monday that Trump’s tariffs would raise prices, slow the global economy and weaken America’s standing in the world by tearing up its alliances. Even some of Trump’s allies, including Elon Musk and Bill Ackman, have recently warned that tariffs are bad policy that rely on extremely flawed logic.

US stocks tumbled on Wednesday with tariff fears returning to Wall Street in earnest, as Nvidia (NVDA) revealed costly new curbs on chip exports to China and Fed Chair Jerome Powell warned of the “challenging” impacts to come from the uncertainty around President Trump’s trade policy.

The benchmark S&P 500 (^GSPC) dropped more than 2.2% while the Dow Jones Industrial Average (^DJI) shed roughly 700 points, or around 1.7%. The tech-heavy Nasdaq Composite (^IXIC) fell over 3% as the new chip provisions weighed on the tech sector.

Stocks hit session lows on Wednesday afternoon as Powell said during a speech in Chicago that the central bank will “wait for greater clarity” before considering any interest rate adjustments. He said he expects Trump’s tariffs to generate “higher inflation and slower growth.”

“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell said.

Meanwhile, AI chip giant Nvidia also found itself caught in the crossfire of the burgeoning US-China trade war. Shares fell about 7% after the company revealed that the US government has imposed new restrictions on its chip exports to China. The company said the move would result in $5.5 billion in charges.

In an exclusive interview with Yahoo Finance on Tuesday, Treasury Secretary Scott Bessett said he expects to see “substantial clarity” on tariffs with major US trading partners, excluding China, over the next 90 days. For its part, China said Wednesday it is open to US talks, but only under certain conditions.

Meanwhile, consumers are already responding to the tariffs. Census Bureau data Wednesday showed retail sales rose more than 1.4% in March, the biggest clip in over two years, as consumers “front-loaded” purchases ahead of anticipated tariffs.

In commodities, gold (GC=F) reached a new record as the escalating trade war continues to push investors toward safe havens.

Asia-Pacific markets traded mostly lower Wednesday after Wall Street declined overnight as investors assessed quarterly earnings, while tariff worries continued to weigh on investor sentiment.

Hong Kong’s Hang Seng Index fell 1.91% to close at 21,056.98. Mainland China’s CSI 300 added 0.31% to close at 3,772.82, after China’s economy expanded by a better-than-expected 5.4% in the first quarter. This comes even as U.S. tariff threats have prompted major investment banks to slash the country’s annual growth outlook. Reuters’ economists had expected a 5.1% expansion year on year.

Japan’s Nikkei 225 fell 1.01% to close at 33,920.4. South Korea’s Kospi fell 1.21% to close at 2,447.43 while the small-cap Kosdaq lost 1.80% to end the trading day at 699.11.

Australia’s S&P/ASX 200 closed the trading day at 7,758.9.

UBS recently downgraded its GDP forecast for China to 3.4% for 2025, and to 3% next year. The investment bank’s chief China economist, Tao Wang, estimates that tariff hikes imposed by the U.S. on Chinese goods will cause a more than 2 percentage points drag on China’s GDP growth.

Bloomberg on Tuesday reported that China had ordered all airlines to halt deliveries of Boeing jets amid a tit-for-tat tariff war with the U.S. This move could increase chances of a negotiation, according to Louis Navellier, founder and chairman of Navellier & Associates.

“The probability of a resolution of the trade spat between China and the U.S. is now expected since Boeing and the technology industry are likely putting pressure on the White House,” said Navellier.

U.S. stock futures slipped as investors looked ahead to the release of a key retail sales report and more earnings from the first-quarter season. Dow Jones Industrial Average futures dropped 139 points, or 0.3%. S&P 500 futures and Nasdaq 100 futures dipped 0.7% and 1.1%, respectively.

Overnight in the U.S., the three major averages fell. The Dow Jones Industrial Average lost 155.83 points, or 0.38%, to close at 40,368.96. The S&P 500 declined 0.17% and ended at 5,396.63. The Nasdaq Composite ticked down 0.05% and settled at 16,823.17. The three averages slipped following back-to-back winning sessions.