NEW YORK — American financial markets experienced another volatile day of trading amid an uncertain economic environment. Investor sentiment shifted negatively after President Donald Trump announced new extensive tariffs that impact the majority of U.S. trading relationships and have the potential to significantly reshape global economic dynamics.
In Wednesday’s standard trading session, the S&P 500 gained 0.7%, the Dow Jones Industrial Average rose by 235 points (an increase of 0.6%), and the Nasdaq composite went up by 0.9%. However, early forecasts for Thursday showed bleak results as futures suggested the S&P 500 would tumble by 3.6% and the Nasdaq would drop by 4.5%.
International markets have been on edge due to the uncertainty surrounding Trump’s trade policies. His administration claims that the new tariffs are intended to establish a more equitable global trading system and bring manufacturing jobs back to the United States. Nonetheless, such tariffs pose the risk of stalling economic growth in the U.S. and abroad, while potentially escalating inflation beyond the Federal Reserve’s target of 2%.
Initially, hopes surged that the turmoil over tariffs would subside, leading to a bullish stock market trend. However, these expectations were shattered when Trump announced a comprehensive 10% baseline tax on imports from all nations, accompanied by increased tariffs on countries with trade surpluses with the United States. The proclamation, made after the market’s close on Wednesday, included a display of a chart reflecting steep taxes: 34% on imports from China, 20% on European Union imports, 25% from South Korea, 24% from Japan, and 32% from Taiwan. These new taxes are in addition to recently introduced 25% tariffs on automotive imports and heightened trade sanctions against China, Canada, Mexico, along with expanded steel and aluminum duties.
Stock movements in after-hours trading mirrored the looming uncertainties. Declines were seen in Lululemon, Williams-Sonoma, and Deckers Outdoor, which dropped by 11%, 10%, and 9% respectively. Major technology companies also faced declines, with Apple dropping 7.4%, Amazon reducing by 6.1%, and Nvidia falling by 5.2%. Meanwhile, Tesla shares decreased by 7.3%. Despite initial struggles in the morning session, due to negative reports on vehicle deliveries and cutbacks tied to Musk’s efforts in the Trump administration, Tesla stocks eventually achieved a daily gain of 5.3% following reports suggesting Musk might withdraw from his government role.
Amidst the turbulence, some stocks saw gains after hours. Norfolk Southern, a railroad operator, rose by 4.7%, while McCormick & Co., a spice producer, witnessed a 2.6% increase.
Prior to Trump’s official declarations, concerns were already circulating that the erratic introduction of tariffs might generate sufficient unease to cause American consumers and businesses to reduce spending, potentially harming economic prospects. While surveys indicate growing pessimism, economists remain cautious about its translation into tangible economic harm. Nonetheless, an employment report released Wednesday suggested a robust job market. According to ADP Research, employers outside the governmental sector accelerated hiring beyond economists’ forecasts, which may hint at positive outcomes in the anticipated government jobs report.
A strong labor market stands as a crucial pillar defending the U.S. economy from slipping into a recession. Concurrently, the bond market also showed fluxes mirroring stock market uncertainties, with the 10-year Treasury yield decreasing from 4.18% to 4.12%.
The day’s outcomes concluded with the S&P 500 climbing by 37.90 points, reaching 5,670.97, the Dow Jones Industrial Average increasing by 235.36 points to 42,225.32, and the Nasdaq composite ascending by 151.16 points to 17,601.05.