- President Trump’s 104% tariffs on Chinese exports and reciprocal duties on 185 countries, met with China’s 84% retaliatory tariffs, have sparked market turmoil, with the S&P 500 nearing bear territory and the 10-year Treasury yield surging in its biggest three-day jump since December 2001.
- While Trump urged calm and touted a buying opportunity as stocks attempt a rebound, strategists like Goldman Sachs’ John Flood see potential S&P 500 (^GSPC) buying at 5,000, though Piper Sandler’s Michael Kantrowitz warns that stabilizing rhetoric is critical amid unprecedented trade dynamics.
President Donald Trump’s tariff policies, now imposing 104% duties on Chinese exports and reciprocal tariffs on 185 countries, have unleashed significant volatility across financial markets, prompting a mix of reassurance and concern as stocks struggle to recover from a punishing sell-off. In a bid to steady nerves, Trump took to Truth Social, urging calm with a message to “BE COOL!” and expressing confidence that the U.S. will emerge “bigger and better than ever before,” even as China retaliated with 84% tariffs on U.S. imports. The S&P 500 (^GSPC), teetering on the edge of bear market territory after one of its worst two-day declines last Thursday and Friday, saw early attempts at a rebound on Wednesday, though Wall Street remains wary of deeper economic fallout.
The Treasury market is flashing warning signs, with the 10-year yield recording its largest three-day surge since December 2001, heightening fears of systemic risks within the global financial system. Despite a resilient U.S. labor market in the lead-up to these trade measures, the specter of a self-inflicted recession looms large, driven by shifting trade dynamics that could disrupt supply chains and corporate earnings. Trump, undeterred, framed the market dip as a buying opportunity in a follow-up Truth Social post, aligning with some strategists’ views, like Goldman Sachs’ John Flood, who noted that longer-term investors might start scaling into the S&P 500 at 5,000, with more aggressive buying in the mid-4,000s.
Skepticism persists among others, with Piper Sandler’s Michael Kantrowitz telling YF that a shift in rhetoric is essential to restore stability, cautioning that historical patterns may offer little guidance in this unprecedented trade environment. The S&P 500’s flirtation with 5,000 as a potential buy signal underscores the delicate balance between opportunity and risk, as investors grapple with the fallout from 104% U.S. tariffs on China, 84% Chinese counter-tariffs, and duties affecting 185 trading partners. These measures, while aimed at reshaping global trade, have rattled markets, with the 10-year yield’s jump amplifying concerns about borrowing costs and economic growth, leaving the path forward uncertain as Trump’s assurances meet a cautious reality.
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