U.S. stocks took a downturn on Thursday, pulling back from significant gains from the previous day. Wall Street is navigating the tricky waters of a global trade situation that, while less intense lately, still poses risks to the economy.
The S&P 500 dropped by 2.3% after soaring by 9.5% just a day earlier. This surge followed President Trump’s decision to pause several tariffs that had been set to escalate. The Dow Jones Industrial Average lost about 700 points, a 1.7% drop, while the Nasdaq composite fell 2.7%.
Even a positive inflation report released that morning couldn’t keep the momentum going for U.S. stocks. Economists suggest that while the report was encouraging, it primarily reflected past conditions. Tariff impacts might lead to rising inflation in the coming months. A favorable jobless report also failed to boost Wall Street’s spirits, as investors focused on future uncertainties instead.
UBS strategist Bhanu Baweja pointed out, “Trump blinks,” referring to the tariff pause, but added that the situation is still precarious. Tariffs on Chinese goods have been particularly high, reaching 125%. If these were reduced to something like 50%, along with 10% on goods from other countries, the economic blow could still be substantial. This might affect corporate profit expectations going forward.
China has been proactively talking to other nations, aiming to bolster support against U.S. tariffs. Meanwhile, the European Union announced a temporary halt on its retaliation measures, keeping the door open for negotiations.
The unpredictability of Trump’s approach has made many investors uneasy. “You never know what to expect with Trump,” said Francis Lun, CEO of Geo Securities, emphasizing the ongoing volatility in the market. The risk of recession looms large, despite some positive signs, particularly in the bond market, where recent tensions appear to be easing.
Earlier this week, Treasury yields spiked, causing market jitters. Investors seemed to be selling off U.S. investments amid trade war concerns. Higher Treasury yields can raise borrowing costs for both households and businesses, exerting further strain on the stock market. Fortunately, the 10-year Treasury yield stabilized at 4.31%, down from a high of nearly 4.50%.
Internationally, markets responded favorably to Trump’s tariff pause. Japan’s Nikkei 225 jumped 9.1%, while South Korea’s Kospi soared by 6.6%, and Germany’s DAX climbed by 5.6%. Such rallies suggest global investors are hopeful for a more stable trade environment.
As we watch these developments unfold, the market remains sensitive, and the ongoing dialogue around tariffs will likely continue to influence economic health in both the U.S. and abroad. For more insights into this evolving situation, you can refer to reports from the U.S. Federal Reserve or the World Trade Organization.
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Source linkFinancial markets, Donald Trump, Scott Bessent, International trade, China, Stocks and bonds, General news, Tariffs and global trade, AP Top News, Business, Europe, Bhanu Baweja, Francis Lun, World news, World News
