NEW YORK (AP) – Wall Street is taking care of it through a shocking day of Monday’s deal, dragging it into a sudden rise from an early drop that dragged below 20% below record.
The S&P 500 went from a 4.7% drop to a 3.4% surge just after trading began. Then, as of 10:30am, I gave up everything and returned to a 1.3% drop.
The Dow Jones industrial average fell 736 points (1.9%), while the Nasdaq Composite fell 1.3%. Both ran through a fierce inversion, with the Dow gaining nearly 900 points from a loss of 1,700 points.
The fierce swing is tense as financial markets are strained and hopes Trump will ease his harsh tariffs.
Some investors have retained hope that Trump could lower his tariffs after negotiating with other countries, and said he heard from leaders on Sunday that he would “death trying to make a deal.” A drop in tariffs could help avoid a recession relatively quickly, but it is still uncertain whether that could happen.
On Sunday, Trump told Air Force reporters he didn’t want the market to fall. However, he also said he was not worried about the sale, saying, “I sometimes have to take medication to fix something.”
Trump has given him several reasons for his strict tariffs, including bringing manufacturing jobs back to the US. Trump on Sunday said he wanted to cut numbers on how much the US imports from other countries and how much it sends to them.
“Recent tariffs are likely to increase inflation, causing many to increase the likelihood of a recession,” JP Morgan CEO Jamie Dimon wrote in an annual letter to shareholders on Monday. He is one of Wall Street’s most influential executives. “Whether the tariff menu will cause a recession remains a question, but it will slow growth.”
Financial pain has once again struck global investments. Hong Kong stocks plummeted 13.2% on the worst day since 1997. For the first time since 2021, US crude barrels have temporarily fallen below $60. Bitcoin fell below $78,000 from its record above $100,000 in January after becoming more stable than other markets last week.
Trump’s tariffs were an attack on globalization reshaping the global economy, helping to lower prices for products on US store shelves, but they also left production work to other countries.
It also puts pressure on the Federal Reserve. Investors are almost conditioned to expect central banks to plummet as heroes during recessions. Along with other more rigged moves to juice the economy by reducing interest rates and facilitating US households and businesses, the Fed helped the US economy recover from the 2008 financial crisis, the 2020 community crash crash and other bare markets.
However, the Fed may have less freedom to act this time, as conditions vary widely. For one, instead of a system built on coronavirus and too many beliefs that home prices in the US continue to rise, this market slump is largely due to economic policies from the White House.
Perhaps importantly, inflation is higher at this point than the Fed wishes. Low interest rates can also mask the economy, but they can also put upward pressure on inflation. Due to Trump’s tariffs, expectations for inflation have already been high and are likely to raise prices for imported items.
“The idea that there will be a lot of uncertainty in the future about how these tariffs will unfold is that it really drives this plunge in stock prices,” said Nishimura Lintaro, an associate with Asia Group.
If the S&P 500 finishes its record below 20%, Wall Street is a big enough drop with its name. “Bear Market” means a recession that occurs every year or so and moves beyond the 10% drop in mills that graduate to something worse.
The index, which is at the heart of many investors’ 401(k) accounts, has lost nearly 20% since setting a record two months ago. It’s been aside from the worst week since Covid began crashing the global economy in March 2020.
Nathan Thooft, Chief Investment Officer and Senior Portfolio Manager at Manulife Investment Management, said there is a high possibility that more countries will respond to the US with retaliation fees. Given the numerous countries involved, “In our view, it takes quite a bit of time to work through various negotiations that may occur.”
“Ultimately, our view is uncertain about the market and there is a high chance that volatility will last for a while,” he said.
Kurtenbach reported from Bangkok. MacHugh reported from Frankfurt, Germany. Associated Press authors Ayaka McGill, Paul Haroff, Matt Ott and Jiang Junzhe contributed.
Original issue: April 7, 2025, 7:16am EDT
