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The trading day on Wall Street saw significant fluctuations as economic forecasts raised concerns about a potential recession in the U.S., compounded by President Trump’s threats to intensify tariffs on imports from China.
Major market indices experienced sharp declines in the morning, briefly recovering on an unverified report suggesting that President Trump might consider a 90-day pause on tariffs for all nations except China, before resuming their downward trend in the afternoon.
“Is it possible for conditions to worsen? Absolutely,” remarked Nate Thooft, a senior portfolio manager at Manulife Investment Management. “We’re not declaring a stable market just yet, but with this kind of volatility, fluctuations in market sentiment will naturally occur.”
The S&P 500 closed down by 12 points, reflecting a 0.2% decrease, finishing at 5,062. The Dow Jones Industrial Average faced a more considerable drop, losing 349 points or 0.9%, while the Nasdaq Composite managed a slight uptick, gaining 15 points for a 0.1% rise.
CBS News 24/7 will address questions regarding tariffs in a special segment airing Wednesday at 6 p.m. ET. To catch it live, download the CBS News app on your mobile or connected TV.
Equity analyst Adam Crisafulli, head of Vital Knowledge, emphasized the current market dynamics: “Today, there’s more distraction than relevant information; investors ought to refrain from linking every fluctuation in the [S&P 500] to the latest headline. Given the recent sharp declines, an unsustainable pace is evident, which leaves room for potential rebounds.”
The stock market remained volatile throughout the afternoon as President Trump intensified his tariff rhetoric against China. He stated on social media that should China proceed with its plan to impose a 34% retaliatory tariff on U.S. goods, an additional 50% tariff on Chinese imports could be inevitable.
Trump’s post warned, “Any nation that retaliates against the U.S. with additional tariffs, adding to their long-standing tariff practices against us, will face new and significantly higher tariffs, atop those already in place.”
Concerns Over a Slowing Economy
Investors have reacted negatively to President Trump’s tariff policies, increasingly viewing them as a threat to U.S. economic growth and a contributor to rising inflation. Economists at Goldman Sachs raised the probability of a recession to 45% based on the latest round of tariffs.
“The interplay of escalating tariffs, heightened policy uncertainty, dwindling confidence among consumers and businesses, and indications from the administration of a willingness to endure economic challenges for policy objectives significantly amplify downside risks,” stated Goldman analysts in their report.
Market turbulence began last week following Trump’s announcement of a 10% global import duty and “reciprocal” tariffs affecting nearly 90 countries. This shift sent markets into a spiral, with both the S&P 500 and Nasdaq experiencing their most significant two-day drops since March 2020.
International markets also endured considerable declines on Monday, continuing the trends from previous days. The Hang Seng index in Hong Kong plummeted 13.2%, marking its most significant drop since the Asian financial crisis of 1997. Taiwan’s Taiex index fell 9.7%, recording its largest decline ever. Other major indexes across Asia saw sharp decreases, including a 7.8% drop in Tokyo’s Nikkei 225 and a 7.3% decline in Shanghai’s Composite index. In South Korea, the Kospi fell by 5.6%, and Australia’s S&P/ASX 200 decreased by 4.2%.
European markets were also affected, with Germany’s DAX ending down 4.8%, France’s CAC 40 dropping 4.8%, and Britain’s FTSE 100 experiencing a 4.4% loss.
The direction of stock prices in the near term may largely depend on President Trump’s responses to market movements, as noted by Thomas Mathews, head of Asia Pacific markets at Capital Economics. He commented, “If the President responds to market shifts or perceives he has achieved sufficient concessions, he might retract some tariffs, leading to a rapid change in market sentiment.”
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