US stocks and the dollar experienced a significant decline on Thursday, following a sharp increase in the previous session. The focus of traders continues to be on the impact of Donald Trump’s tariffs on global growth.
The S&P 500 index, which saw a remarkable 9.5% surge on Wednesday – its best performance since 2008, dropped by 3.2% in afternoon trading on Thursday. This decline marked a nearly 7% decrease for the index in the month so far. The tech-heavy Nasdaq Composite, which also had an impressive gain of over 12% on Wednesday, fell by 3.7% on Thursday. Additionally, the dollar index, which tracks the currency against several other major peers, plummeted by almost 2%, with the yen, euro, and sterling making significant gains.
While Trump announced a pause on the implementation of “reciprocal” tariffs on trading partners, he maintained a 10% universal levy and revealed plans to increase duties on most Chinese goods to 125%. A White House official clarified on Thursday that these new levies would be in addition to the existing 20% rate imposed on Beijing.
Despite the initial positive market reaction to Trump’s decision, concerns remain among Wall Street banks and investors. The continued high tariff rates could potentially hinder economic growth and even push the US economy into a recession. JPMorgan expressed skepticism about the possibility of the US avoiding a recession given the current trade and fiscal policy uncertainties.
Bill Campbell, a global bond portfolio manager at DoubleLine, highlighted that uncertainty surrounding Trump’s trade policies will likely impact markets and macroeconomic outlooks in the coming months and quarters. European stocks also retreated from early gains, with the Stoxx Europe 600 index up 3.7% in the UK afternoon. The UK’s FTSE 100 saw a 3% increase after initially rising by 6.3%.
Furthermore, the yield on 10-year US Treasuries rose by 0.04 percentage points to 4.35%, indicating a sell-off in US government bonds. The market volatility and uncertainty surrounding trade policies continue to weigh on investor sentiment and could have broader implications for global economic growth.
