Stocks Fall as Tariff Pause Fails to Quell Wall Street's Worries
The S&P 500 fell 3.5 percent, a day after recording its best gain since 2008. The drop erased much of Wednesday's 9.5 percent rise and showed that fears that tariffs could hamper economic growth were still very much alive.
Thursday's drop brought a continuation of the chaotic trading conditions and sharp losses that have characterized the stock market since President Trump's announcement last week of steep tariffs across the nation's trading partners. As stocks slid again, the wild swings in government bonds caught the attention of policymakers who are watching to ensure that one of the most crucial financial markets in the world continues to function smoothly.
Investors had welcomed Mr. Trump's 90-day reprieve on higher tariffs, and the market soared within minutes of the announcement on Wednesday. The pause applied to all countries except China, which investors had thought would face an import tax of 125 percent.
But stocks began to drop on Thursday morning as analysts noted that even with the tariff pause, countries still faced a new blanket 10 percent tariff — already much higher than before. Tariffs recently imposed on cars and auto parts, and steel and aluminum, would also remain in place. Then the White House clarified that the new 125 percent tariff on Chinese imports was on top of earlier 20 percent tariffs, taking the number to 145 percent.
'Despite the good news, policy uncertainty remains elevated and will act as a drag on the U.S. economy,' James Rossiter, the head of global macro strategy at TD Securities, wrote in a note. 'Firms will struggle to plan.'
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