NEW YORK (AP) — U.S. stocks experienced a significant drop on Thursday, erasing a substantial portion of the gains made just a day prior, amid ongoing concerns related to President Donald Trump’s trade policies.
The S&P 500 plummeted 3.5 percent, following a remarkable surge of 9.5 percent on Wednesday, which was fueled by Trump’s announcement to suspend many of his tariffs globally.
On that day, the Dow Jones Industrial Average fell by 1,014 points, or 2.5 percent, while the Nasdaq composite faced a decline of 4.3 percent.
UBS strategist Bhanu Baweja commented on the situation, noting, “Trump blinks, but the damage isn’t all undone.”
Trump’s focus has increasingly shifted towards China, leading to tariffs on its products that have reached levels exceeding 100 percent.
Baweja suggested that even if negotiations were to reduce these tariffs to approximately 50 percent, and if only 10 percent tariffs were maintained on other countries, the repercussions could still significantly impact U.S. economic growth and corporate profit expectations.
The declines on Thursday were further exacerbated when the White House clarified that the United States would impose taxes on Chinese imports set at 145 percent, a figure higher than the previously mentioned 125 percent rate.
The S&P 500 saw its losses accelerate at one point, dipping more than 6 percent as market uncertainty grew.
“This is really big uncertainty in the market,” said Francis Lun, chief executive of Geo Securities. “The threat of recession has not faded.”
In response to the escalating tensions, China has begun outreach to various nations, seemingly seeking to establish a united stance against Trump’s trade measures.
Additionally, China has announced it is enhancing its countermeasures in response to the tariffs imposed by the U.S.
One of the more notable stock casualties was Warner Bros. Discovery, which faced a 12.5 percent drop in its stock price following China’s announcement that it would “appropriately reduce the number of imported U.S. films.”
The Walt Disney Co. was not spared either, witnessing a decline of 6.8 percent.
A representative for the China Film Administration remarked that it is “inevitable” for Chinese audiences to develop reduced interest in American films, particularly as a consequence of the U.S. imposing tariffs on China.
In an attempt to avert further escalation, Trump and Treasury Secretary Scott Bessent conveyed a message to other nations, stating that if they refrain from retaliating, they would be rewarded.
Following this announcement, the European Union decided to suspend its trade retaliation measures for 90 days, leaving the door open for negotiations.
The turbulence in U.S. markets also rippled through the bond market, which had previously shown promising signals that stress was easing.
Historically, the bond market has played a key role in enforcing fiscal discipline against policies deemed imprudent—an influence that notably affected the political landscape in the U.K. in recent years.
Earlier this week, rising U.S. Treasury yields had raised alarm, prompting Trump to observe that investors were “getting a little queasy.”
Various factors may have contributed to the dramatic surge in yields, including hedge funds liquidating Treasurys for cash and foreign investors offloading U.S. government bonds amid trade war fears.
Higher Treasury yields typically exert upward pressure on the stock market and contribute to increased rates for mortgages and other loans critical for U.S. households and businesses.
In the immediate aftermath of Trump’s reversal regarding tariffs, the 10-year Treasury yield initially showed improvement, dropping back to 4.30 percent after a better-than-expected inflation report Thursday morning.
This decrease followed a spike that brought the yield close to 4.50 percent earlier that week, rising from 4.01 percent as of the previous Friday.
As the day wore on, however, the 10-year Treasury yield climbed again to 4.40 percent, symbolizing the persistent volatility in the markets.
These fluctuations reveal that many on Wall Street are bracing for more turbulent times ahead.
The S&P 500 even approached a “bear market” threshold at one point, nearing a 20% drop from its record high.
The markets’ erratic movements have been prevalent not only day-to-day but also hour-to-hour, highlighting the unpredictable nature of the current economic climate.
In total, the S&P 500 declined by 188.85 points, settling at 5,268.05, while the Dow Jones Industrial Average decreased by 1,014.79, to close at 39,593.66.
The Nasdaq composite faced a significant loss as well, sinking by 737.66 to settle at 16,387.31.
Meanwhile, in global markets, there were upward movements in indexes across Europe and Asia, as these regions reacted to Trump’s tariff suspension.
Japan’s Nikkei 225 saw a notable increase of 9.1 percent, while South Korea’s Kospi surged by 6.6 percent, and Germany’s DAX experienced a rise of 4.5 percent.
The ongoing uncertainties and swings in the market reflect a period of heightened caution and speculation, as investors navigate the complexities of the U.S.-China trade landscape.
image source from：https://www.pbs.org/newshour/economy/u-s-stocks-dove-as-wall-street-euphoria-reverted-to-concern-over-u-s-china-trade-war
