Stocks Swing Wildly as Investors React to Tariff Developments
NEW YORK — U.S. markets faced sharp and erratic fluctuations on Monday as investors attempted to make sense of the latest developments in global trade policy. Stock indexes opened deep in the red but rebounded on unconfirmed reports that tariff implementations could be delayed—only to fall again after the rumors were denied by White House officials.
The Dow Jones Industrial Average fell as much as 840 points, or 2.2%, during trading. The S&P 500 and Nasdaq Composite also declined by 1.7% and 1.5%, respectively.
Early Rebound Fueled by Rumors, Quickly Reversed
U.S. futures and global markets had already signaled turbulence early Monday following a rough close to the previous week. Hopes were briefly lifted by speculation that the administration might pause or ease upcoming tariffs, leading to a rapid intraday surge in stocks. The S&P 500 gained 8.5% from its low in just over 30 minutes.
That rally ended abruptly when a White House official dismissed the speculation, calling reports of a pause “false.”
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Global Trade Pressures and Market Response
Markets are responding to escalating tensions over trade policies, including:
- A 10% tariff on numerous imported goods already in effect
- A threat of an additional 50% tariff on Chinese imports if Beijing does not reverse its retaliatory tariffs
- Upcoming tariffs on auto parts, steel, aluminum, and possibly lumber, pharmaceuticals, and electronics
Commerce Secretary Howard Lutnick confirmed over the weekend that no delay is expected, while Treasury officials reported over 50 countries have expressed willingness to negotiate. However, little progress appears to have been made so far.
Global Market Reactions and Volatility Indicators
International markets mirrored the U.S. uncertainty:
- Japan’s Nikkei 225 dropped 8% at open
- European markets faced similar declines
The CBOE Volatility Index (VIX), a key gauge of market stress, surged to levels last seen during the 2020 pandemic, while CNN’s Fear and Greed Index hit a yearly low. Investors moved capital into safer assets, with oil prices dipping below $60 per barrel and Treasury yields falling, impacting consumer borrowing rates.
EU Signals Willingness to Negotiate
European Commission President Ursula von der Leyen indicated that the EU remains open to a deal, noting a standing offer to eliminate tariffs on industrial goods, including automobiles. However, she also stated that the EU is preparing a retaliation list if negotiations fail.
Bear Market Territory Approached
The S&P 500, which reached a record high just weeks ago, briefly entered bear market territory Monday, marking a 20% drop from recent peaks. Analysts compared the speed of the decline to that seen during the early days of the COVID-19 crisis.
With many stocks trading at reduced valuations, some analysts suggest that markets may be nearing a bottom. Others warned that any recovery could depend on changes in trade policy or improved clarity from Washington.
Economic Outlook and Policy Impact
Major financial institutions have begun issuing warnings:
- Goldman Sachs said full implementation of the tariffs could trigger a global recession
- JPMorgan CEO Jamie Dimon cautioned that continued tariff expansion would lead to higher prices and slower growth
Despite the pressure from Wall Street, President Trump has remained firm, stating that the U.S. is collecting billions through existing tariffs and suggesting that concerns about inflation are overstated.
