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Wild Trading on Wall Street Amid Tariff Uncertainty
A social media post, later proven false, concerning a possible 90-day suspension of President Donald Trump’s tariffs ignited a dramatic day on Wall Street Monday, leading to a staggering $2.4 trillion fluctuation in market value. The major indexes experienced extreme volatility as investors reacted to the rumor before market realities set in.
Rollercoaster Session Exposes Market Jitters
The turbulent market reversal highlighted the heightened sensitivity of Wall Street, where even fleeting suggestions of positive news can trigger rapid surges, only to be followed by sharp declines fueled by unsubstantiated claims. This erratic behavior underscores the deep unease gripping the financial markets.
By the day’s end, the Dow Jones Industrial Average concluded with a 1 percent decrease, the S&P 500 Index edged down 0.2 percent, and the Nasdaq Composite Index barely remained in positive territory.
Despite not being a positive trading day overall, the market volatility at one point raised concerns of a potential repeat of the 1987 “Black Monday” stock market crash.
Indexes Plunge Before False Hope Rally
Earlier in the trading day, all three primary US stock indexes plummeted to their lowest points in over a year. Concurrently, the VIX, a key indicator of market fear, reached its highest level since August 2024.
This initial downturn was exacerbated by President Trump’s firm stance on his newly enacted tariffs. Adding to investor anxiety, the President suggested an additional 50 percent increase in tariffs on Chinese goods mid-morning.
False Report Sparks Brief Market Surge
The market narrative then took an abrupt turn. Stock prices reversed course sharply following reports that White House economic advisor Kevin Hassett had mentioned in an interview the possibility of President Trump considering a temporary tariff reprieve for all nations except China.
However, this information proved to be inaccurate. The erroneous reports originated from a genuine Fox News interview with Hassett around 8:30 AM ET. When questioned about a potential 90-day tariff pause, Hassett responded ambiguously, stating, “The president is going to decide what the president is going to decide.”
This vague statement quickly spread on social media platform X, interpreted by some as confirmation of a tariff pause.
Shortly after the rumor gained traction, the White House officially dismissed it as “fake news.”
Market Swings Intensify After Clarification
Following the administration’s denial, stock prices resumed their downward trend, leading to continuous and significant market fluctuations throughout the day.
Wall Street witnessed exceptionally volatile trading, with the Dow Jones Industrial Average experiencing a massive 2,500-point swing between its intraday high and low.
President Donald Trump arrives at the White House. Despite his claims of world leaders eager to negotiate deals, US stock futures and Asian markets declined sharply.
S&P 500 futures initially dropped by as much as 4.2 percent before partially recovering.
Tariff Policies Fuel Market Instability
Initially, it appeared US stocks were headed for a third consecutive day of significant losses as President Trump reiterated his commitment to his sweeping new tariffs. Indeed, shortly after 11 AM, the President threatened to further escalate trade tensions by increasing tariffs on China by an additional 50 percent.
These dramatic market movements resulted in trillions of dollars being both erased and added to the valuation of US equities, assets crucial to many Americans’ retirement savings, such as 401(k) accounts.
Global Markets React Negatively
Trading markets across Asia and Europe also experienced downturns. Hong Kong’s market led the global decline, plummeting 13.2 percent, marking its most substantial drop in nearly three decades. Tokyo’s market also fell sharply, declining by 8 percent.
Concerns arose about a potential repetition of the 1987 “Black Monday” crash. The term “Black Monday” became a trending topic on X, referencing the severe global stock market crash of 1987, as uncertainty mounted before the US markets opened on Monday at 9:30 AM EST.
Experts Express Concerns Over Trade Policy
Rick Meckler, partner at Cherry Lane Investments, commented on the market situation, stating, “The fundamental issue for the market is that the administration’s strategy for addressing trade imbalances involves a remedy that could be more detrimental than the problem itself.”
Meckler further added, “Investors clearly prefer either a pause in tariffs or a revised approach. It is noteworthy that despite the significant number of Trump supporters within the investment and business sectors, there seems to be a lack of broad support for the administration’s tariff policies.”
Previous Week’s Market Turmoil
Following President Trump’s initial tariff announcements the previous week, stock markets experienced a sharp downturn.
The market endured its most significant two-day decline in US stock market history, with a staggering $6.6 trillion in value wiped out from publicly traded companies.
Traders on the floor of the New York Stock Exchange (NYSE) on Monday morning, amidst ongoing market declines driven by tariff concerns.
Tariffs Expand, Economic Risks Rise
President Trump’s initial 10 percent tariff, applying to nearly all US imports except those from Mexico and Canada, took effect on Saturday. Further tariff increases are scheduled for April 9, impacting goods from 57 major trading partners, including the European Union.
Bill Dudley, former president of the Federal Reserve Bank of New York, warned on Monday that stagflation is now the “best-case scenario” for the US economy.
Stagflation Fears Grow
Stagflation is defined by the unfavorable combination of stagnant economic growth and persistent inflation. It is characterized by continuously rising prices coupled with slowing economic expansion and increasing unemployment rates.
Many economists regard stagflation, a phenomenon last observed in the US during the 1970s, as a more severe economic challenge than a typical recession.
Dudley, who led the New York Fed from 2009 to 2018, expressed his concerns in a column for Bloomberg.
“Do not anticipate the Federal Reserve to bail out the US economy from the massive tariffs imposed by the Trump administration on imports from much of the world. The only uncertainty now is the extent of the damage,” he wrote.
“In summary, stagflation represents the optimistic outlook. It is more probable that the US will descend into a significant recession accompanied by elevated inflation.”
Economic Experts Acknowledge Recession Risks
Meanwhile, a prominent business analyst from Fox News acknowledged that President Trump’s tariffs could potentially induce a recession, a shift from a more optimistic assessment provided earlier on Monday.
Business expert Maria Bartiromo admitted on Fox News Monday morning that President Trump’s tariffs might trigger an economic recession.
Maria Bartiromo recognized the potential for an economic downturn during a live broadcast on Monday morning, as a real-time ticker displayed the Dow Jones stock index plummeting.
Earlier in the day, Jamie Dimon, CEO of JPMorgan Chase, also voiced concerns about the impact of tariffs.
In a letter to shareholders, the banker cautioned that President Trump’s import taxes would “slow down growth.”