Michelle ThompsonOn Monday, US stocks stabilized as investors held onto hopes that President Donald Trump would shift focus from tariffs to trade agreements. The S&P 500, which tracks 500 major US companies, ended the day down approximately 0.2%, following a volatile trading session marked by sharp swings between losses and gains, similar to those seen during the Covid-19 pandemic.
This temporary relief came even as Trump intensified his tariff threats against China. Meanwhile, US Treasury Secretary Scott Bessent announced negotiations with Japan and upcoming talks with other nations. Trump signaled mixed intentions, stating that some tariffs might be permanent while others could be negotiated, adding, “They can both be true.” He also rejected calls to delay the global import taxes he introduced last Wednesday.
The White House mentioned that over 50 countries have reached out to discuss trade matters. European Union trade official Maroš Šefčovič expressed confidence, stating, “I believe that sooner or later, we will be at the negotiating table,” as the EU prepared to vote on its response.
In the days following Trump’s announcement, stock markets in the US and UK experienced their largest single-day drops since the start of the Covid pandemic in 2020.
The S&P 500 saw more than 10% of its value erased over a three-day span, with the decline nearly matching the sharp losses during the 2008 financial crisis and the early days of the 2020 pandemic. The index is now trading at levels similar to those a year ago, reflecting widespread concerns about the potential impact of the tariffs on both the US and global economies.
“It’s frustrating for investors,” commented Mike Mussio, president of FBB Capital. “This feels like an unforced error in terms of policy.”
Prominent business figures in the US, such as Jamie Dimon, Bill Ackman (a Trump supporter), and Daniel Loeb, have started to speak out amid the market turmoil. However, Trump has stood firm on his approach.
On Monday, Trump escalated his stance, threatening to impose an additional 50% tariff on Chinese imports unless Beijing backs down from the retaliatory measures it introduced the previous week. This would raise the tariff on Chinese goods to at least 104%, adding to the 34% tariff from last week and the 20% tariff imposed since January.
China’s decision to levy retaliatory tariffs of 34% on US goods has already heightened concerns of a potential trade war between the two nations. Analysts have warned that if world leaders fail to reach an agreement with Trump, the tariffs could severely impact global economies.
“Investors are fundamentally worried about a significant hit to corporate profits and a massive slowdown in economic growth,” said Russ Mould, investment director at AJ Bell.
During early trading on Monday, the S&P 500 briefly fell by more than 20% from its most recent peak in February, a level that marks a “bear market.” However, rumors that the White House might pause the tariffs led to a sharp surge in shares, which gained over 7% in just minutes.
Howard Silverblatt, senior index analyst at S&P Dow Jones indices, noted that such extreme market movements were rare in his more than 40-year career on Wall Street. “There’s a lot of uncertainty here, and that’s what’s driving the market,” he said.
The Dow Jones Industrial Average closed down 0.9%, while the Nasdaq remained mostly unchanged, rising by 0.1%. European markets also closed lower, with London’s FTSE 100 falling by 4.4% to 7,702, its lowest level in over a year. Shares in Paris and Berlin also dropped, while Asian markets had already suffered significant losses earlier, with one analyst describing it as a “bloodbath.”
The concerns also affected commodity prices, with oil prices falling more than 4% before partially recovering. Copper, a key indicator of economic activity, dropped by around 3%, while gold, typically seen as a “safe” investment, also declined.
