Tariffs Rattle Stocks

US stock markets whipsawed yesterday amid fears of a growing trade war triggered by President Donald Trump’s sweeping tariffs. The S&P 500 briefly hit bear market territory—defined as a 20% drop from its recent peak—while the Nasdaq composite has already entered bear market conditions. The Dow Jones Industrial Average is down nearly 10% from its December high. All three indexes started the day lower before closing mixed (S&P 500 -0.2%, Dow -1.0%, Nasdaq +0.1%). 

Roughly $9.5T in global equity value has been wiped out over three trading days—one of the fastest plunges since World War II. Meanwhile, the VIX—Wall Street’s real-time index measuring the S&P 500's expected 30-day volatility—spiked past 60 for the first time since August before settling around 48. See charts here.

The news comes as Trump doubled down on his minimum 10% global tariff and threatened an additional 50% tariff on China. Analysts warn this could tip the US into recession, though some predict the Federal Reserve may respond with up to four rate cuts this year. Trump said tariff negotiations with other countries will begin “immediately.”