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The brutal Wall Street sale resumed Thursday as banks and investors warned that Donald Trump’s tariffs could put the US in a recession.
The S&P 500 dropped 3.5% on another day of turbulent trading, showing a sharp turnaround from a 9.5% surge in the previous session. Wall Street’s benchmark share index fell 6.1% in April.
The high-tech NASDAQ composite has dropped by 4.3% from its highest day since 2001. In the currency market, the dollar indicators for half a dozen as the rush from US assets rallyed the Japanese yen, euro and British pounds.
Markets surged Wednesday after Trump paused for 90 days. Profits were a reprieve from massive sales across the US market this week that had permeated the $2.9 billion financial market, the foundation of the financial system.
However, Wall Street banks and investors said the president’s decision to put China’s import duties at 145% was to maintain a universal tariff of 10% still shows serious risks to the US economy.
“With continued policy disruption on trade and domestic fiscal issues and still significant losses and confidence in the stock market, it remains difficult to see the US avoid the recession,” Jpmorgan said.
Goldman Sachs said it was “too early for “everything to be clear,” and warned that “the risk of immediate tails has been reduced, but policy uncertainty is very high and there is a high chance that consumers will be weighed against business activities.”
The U.S. Treasury faced a burst of sales on Thursday, with the benchmark 10-year note yielding 0.11 percentage points at 4.41 percent, down about 0.1 percentage points from its weekly high.
Krishna Guha, Vice Chair of Evercore ISI, said:
The market was under great pressure as Trump held a cabinet meeting aired in the White House. Treasury Secretary Scott Bescent responded to a reporter asking about market slides, saying, “Nothing is unusual today.” He answered questions after Trump said he hadn’t seen the market Thursday.
Trump said of China: He also said that if other countries refuse to build a new trade deal with Washington, they are ready to recapture widespread mutual tariffs.
China on Thursday imposed an 84% Tatt tariff on the US as planned, imposing a total collection of over 100% on US imports. President Xi Jinping signaled that he would not retreat from the escalating trade war, but Beijing did not move immediately to rival Trump’s even higher rates.
“If you want to talk, the doors are open, but you need to have an equal dialogue based on mutual respect,” China’s Commerce Ministry said. “If you want to fight, China will fight to the end. Pressure, threats and threats are not the right way to deal with China.”
Renminbi hopes that Beijing will gradually tolerate depreciation in response to US tariffs, with the latest indication since 2007.
Fear of the growing trade war between the two biggest economies in the world fell again on Thursday, with international benchmark Brent down 3% at $62.33 a barrel. The West Texas intermediate settled for $60.07. This is a price that threatens the country’s prolific shale sector, analysts said.
According to the Peterson Institute for International Economics, the trade dispute with China, the world’s largest exporter, has raised the average US tariff on imports from Asian countries to 134.7%.
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Another analysis with Yale Budget Lab shows that American consumers are currently facing a 27% tariff rate, the highest level since 1903, taking into account US tariffs and tariffs imposed on the US.
Bill Campbell, Global Bond Portfolio Manager at Doubleline, said uncertainty about Trump’s trade policies and goals would “stricken the market and macroeconomic outlook for months and quarter.”
“The overhang of uncertainty around tariffs complicates business decisions regarding strategic issues such as the maintenance or relocation location of production facilities, periodic issues such as salaries and layoff management, and (capital expenditures).”
Reported by Kate Duguid, Will Schmitt, Harriet Clarfelt, George Steer in New York, SteffChávez, Williams in Washington
