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Reuters
11-04-2025
- Business
- Reuters
Wall St Week Ahead Broadening asset volatility intensifies worries for tariff-tossed US stocks
NEW YORK, April 11 (Reuters) - Wild swings in global markets are poised to keep U.S. stock investors on edge in the coming week, as a weakening dollar and a selloff in Treasuries compound extreme equity volatility that erupted after President Donald Trump launched his sweeping tariffs. The S&P 500 (.SPX), opens new tab was set for solid gains on the week after Trump pulled back on the heftiest tariffs on many countries, relieving Wall Street's worst-case scenario. Still, the benchmark index still was down about 13% from its February 19 all-time closing high. Concerns about lasting economic damage remained as the U.S. and China ratcheted up their trade battle and questions lingered over levies elsewhere as Trump only paused many of the most severe tariffs. Investors punished U.S. assets in the wake of Trump's tariffs, with the dollar plunging against other major currencies and benchmark U.S. Treasury yields, which move opposite to bond prices, surging. The stock market is "very unsettled" as investors weigh how to price in any economic fallout from the changing tariff backdrop, said Mark Luschini, chief investment strategist at Janney Montgomery Scott. The market is "kind of trapped by the level of uncertainty that lurks out there," Luschini said. "And therefore investors are largely unwilling to make big bets in one direction or another." A volatile week in stocks was highlighted by Wednesday's 9.5% jump for the S&P 500, the index's biggest one-day rise since October 2008 during the heart of the financial crisis. The Cboe Volatility index (.VIX), opens new tab, an options-based measure of investor anxiety, stood at around 40, more than twice its historic median level. Stock investors were warily watching moves across asset classes, in particular the dollar and Treasuries. An index that measures the dollar against a basket of currencies on Friday fell below 100 for the first time in nearly two years, while the yield on the benchmark 10-year Treasury was on pace for its biggest weekly jump in decades. In many prior risk-off events, the dollar and Treasuries have acted as safe havens, but that has not been the case over the last week as stocks have tumbled, said Walter Todd, chief investment officer at Greenwood Capital in South Carolina. 'We are the reserve currency and the risk free asset of the world, and our markets are not acting as such," Todd said. The yield on the 10-year Treasury on Friday topped 4.5%, which investors have cited as a level that could cause turbulence for stocks. Higher yields translate into higher borrowing costs for consumers and businesses, while potentially making bonds more competitive investments against stocks. "Until Treasuries stabilize and start to behave normally, risk assets will struggle," Barclays analysts said in a note on Friday. Quarterly U.S. corporate results in the coming week provide another test for investors. Goldman Sachs (GS.N), opens new tab, Johnson & Johnson (JNJ.N), opens new tab and Netflix (NFLX.O), opens new tab are among the major U.S. companies set to report. Bryant VanCronkhite, senior portfolio manager at Allspring Global Investments, said he would be looking for companies which can show confidence in their businesses despite the shifting tariff landscape. "I'm looking for companies that have the competence and the desire to invest through this cycle," VanCronkhite said. Data on U.S. retail sales for March will shed light on the health of the consumer, but investors may discount the report to some extent because it covers a period before Trump's April 2 tariff announcement. A survey on Friday showed U.S. consumer sentiment fell sharply in April and 12-month inflation expectations surged to the highest level since 1981 amid unease over escalating trade tensions. Markets will remain highly sensitive to developments on the trade front. Investors will hope for evidence of progress between the U.S. and countries for which Trump has paused hefty levies for 90 days. The faceoff between the U.S. and China -- the world's two largest economies -- will also consume attention. Beijing increased its tariffs on U.S. imports to 125% on Friday after Trump's move to hike duties on Chinese goods. "China negotiations remain key for markets," Citi strategists said in a note.
Zawya
11-04-2025
- Business
- Zawya
Wall Street's week of whiplash brought fear, relief and caution
NEW YORK - Wall Street traders and investors have been sent to the brink over the past week by President Donald Trump's tariff policy, scrambling to figure out strategies and calming clients as trillions were wiped off stock market values. A massive relief rally, however, comes with a caution sign. Since announcing sweeping tariffs on April 2, the S&P 500 has done a near round-trip of historic proportions. The benchmark index extended its slide from its February high to the brink of confirming a bear market, as investors priced in dire scenarios for the economy after Trump announced tariffs that would raise U.S. trade barriers to the highest levels in over a century. The Cboe Volatility index, Wall Street's "fear gauge," soared earlier this week to its highest closing level since the COVID-19 pandemic five years ago. Then, in a stunning reversal on Wednesday, Trump said he would temporarily lower the hefty duties on dozens of countries while further ramping up pressure on China, prompting a massive relief rally, sending the S&P 500 up nearly 10%, its biggest one-day jump since October 2008. The rapid policy changes translated into non-stop action, stress and drama on trading floors and investment houses. "It's been a quite a wild ride," said Joe Tigay, portfolio manager for Rational Equity Armor Fund, who said it brought back memories of trading through massive swings during the pandemic. "Personally, honestly, this is what I live for." The rapid pace of unfolding events in recent days prompted a deft juggling of priorities, including client calls, trading and making sense of markets, said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group, as the market drama surpassed the wild trading seen during the COVID-induced market crash of March 2020. "This is more headline driven than what we saw in COVID," Murphy said. "There's just not enough time because you're going from one thing to the next." Clients wanted frequent updates as market losses stacked up, advisers said. "We reached out to as many clients as possible via a client letter and phone calls," said Gina Bolvin, president of Bolvin Wealth Management Group in Boston. "Some of my nervous clients were comforted when they learned that as the market was declining I had been investing some of my own money." But while some have embraced the volatility, others caution that the market remains fragile, U.S. policy remains unpredictable and that the U.S. is not out of the woods. "It's definitely good news because it shows that the negotiations are in good enough shape that they think that they've accomplished what they needed to by this initial conversation," said Mark Hackett, chief market strategist, Nationwide Investment Management Group in Philadelphia. "But I want to put a pretty big caveat out there because 8% rallies in 20 minutes in the Nasdaq aren't a heck of a lot healthier than 8% declines." TRUMP PUT BACK ON? After a week of concern that Trump was no longer worried about stock market losses, some investors speculated that markets had prompted Trump's decision, including a rout in the bond market that came to a head on Wednesday and led to a massive spike in Treasury yields. Investors had previously relied on the theory of a Trump put, a reference to investor belief that Trump would reverse policy if markets ran into trouble. "I think this is a reminder that Trump does not want a bear market in stocks, and he does not want a recession, so this is forcing a rethink of the approach," said Talley Leger, chief market strategist, The Wealth Consulting Group. But many investors said persistent uncertainty around tariff policy could still have broad fallout, impeding the ability of companies to plan and influencing consumer behavior. "They hit the pause button and the market rejoiced," said Alex Morris, chief investment officer at F/m Investments. "But of course, there is no promise that we'll manage to solve anything in 90 days." Deutsche Bank said in a note that while the Trump put appears back on, the policy back-and-forth will cause lasting damage. "Even if the tariffs are permanently suspended, damage has been done to the economy via a permanent sense of unpredictability in policy." Market volatility on Wednesday had been trained on the bond market, which saw a bruising selloff in U.S. Treasuries, with some market participants saying funds had been selling such liquid assets such as Treasuries to meet margin calls. "There's definitely sensitivity to what happens in the Treasury market," said Matt Orton, chief market strategist at Raymond James Investment Management. "If something breaks in the Treasury market, that could be very, very bad." Trump said on Wednesday the bond market had recovered well after investors became queasy about it in reaction to his tariffs. "The bond market now is beautiful," he told reporters. The White House said Trump's move to hike tariffs on China and pause tariffs on other countries came after receiving "good-faith commitments from a majority of our trading partners willing to strike favorable trade deals." "The only interest guiding President Trump's decision making is the best interest of the American people," White House spokesman Kush Desai said. "The Trump administration remains committed to using every tool at our disposal to address the national emergency posed by chronic trade deficits – including both tariffs and negotiations.' 'STRESSFUL WEEK' Some investors felt the relentless string of bad news for markets and wild gyrations were impossible to maintain. "We had assumed that some form of capitulation would be forthcoming," said Christopher Hodge, chief economist for the US at Natixis in New York, citing the financial carnage and expectation of economic pain. Since Trump unveiled his tariff plan on April 2, the stock market has undergone some record-breaking gyrations. It notched an 8.1% intra-day price swing in the benchmark S&P 500 index on Monday, while Tuesday's market saw one of the biggest reversals for the benchmark index in at least the last 50 years. Wednesday's market about-face was even more stark, with the day's 10.7% range stacking up as the fifth largest in at least the last fifty years. Bolvin said this had been "a stressful week." "When my 3 year old woke up and asked if the market was down, I knew we were close to the bottom," Bolvin said. (Additional reporting by Lewis Krauskopf, Laura Matthews, Chuck Mikolajczak, Carolina Mandl, Davide Barbuscia; editing by Megan Davies and Deepa Babington)
Reuters
11-04-2025
- Business
- Reuters
Investors grapple with tariff-driven economic threat as market swings persist
NEW YORK, April 11 (Reuters) - Investors hoping for an end to wild market swings were reminded on Thursday that fallout from U.S. President Donald Trump's shifting tariff plans remains a threat to earnings and the economy, and could deal yet more punishment to equities. Relief over Trump's move on Wednesday to pull back on some of his heftiest global tariffs proved somewhat short-lived. Investors were unsettled by the escalating trade battle with China, the second-biggest provider of U.S. imports, while the president's 90-day pause on hefty levies elsewhere meant the tariff cloud was not going away anytime soon. "The worst-case scenario on trade has been avoided but it's not all as fine and dandy as we'd like it to be," said Michael Brown, senior research strategist at Pepperstone. "We've built in 90 days' worth of humongous uncertainty now." The S&P 500 (.SPX), opens new tab ended down 3.5% on Thursday, after falling more than 6% during the session. A day earlier, the benchmark index soared 9.5%, which was its biggest one-day rise since October 2008 during the heart of the financial crisis. It is now down 14.3% from its February 19 record high. While Trump's move on tariffs opens the door to de-escalation, "that's not going to happen overnight," said Angelo Kourkafas, senior investment strategist at Edward Jones. Volatility spiked higher again on Thursday, with the Cboe Volatility index (.VIX), opens new tab rising to as much as nearly 55 points, more than three times its median long-term level. The index, known as Wall Street's "fear gauge", in the past week has delivered some of its most elevated readings since the start of the COVID-19 crisis five years ago. The stock market has seen enormous swings since Trump announced his sweeping tariffs on April 2. On Wednesday, the S&P 500's 10.7% intraday range marked the fifth-largest one-day swing in at least the last fifty years. That stunning market rebound came after the index had been on the brink of confirming a bear market, sliding nearly 20% from its February high. Investors who may have regretted not selling earlier in the market's decline could have been taking advantage of Wednesday's huge gains to unload holdings on Thursday, said Sameer Samana, head of global equities and real assets at the Wells Fargo Investment Institute. The selloff "shows you how many people are thinking, we're just not sure what is going to happen next, so we're going to just take the money and run," Samana said. ECONOMY WORRIES REMAIN Even as Trump eased back on the harshest trade measures for now, investors still worried about the fallout for the economy. "The drag from trade policy is likely to be somewhat less than before... (but) we still think a contraction in real activity later this year is more likely than not," JPMorgan analysts said. Despite the 90-day pause, the fact there is a baseline 10% tariff and other tariffs such as those on autos remain in place is not a good scenario, said Adam Hetts, global head of multi-asset at Janus Henderson. "Recession risk is much, much higher now than it was a couple weeks ago," Hetts said. The firm is advising investors to cut stock holdings and buy more investment-grade sovereign bonds as tariffs threaten to slow global growth, he said. As companies start reporting quarterly results in the coming days, investors are bracing for executives to offer little clarity about their outlooks because of the uncertain trade environment. In light of the sweeping tariffs, any details from companies about their supply chains and investment plans will be valuable, said Marta Norton, chief investment strategist at retirement and wealth services provider Empower. Any earnings disappointments posed a risk for stocks, Norton said, especially in light of the new trade regime corporations now face. "There's room for downside surprise," Norton said.
Reuters
10-04-2025
- Business
- Reuters
Wall Street's week of whiplash brought fear, relief and caution
Summary Trump's flip-flop on tariffs stokes dramatic market volatility Market turmoil reminder of scenes from pandemic trading Analysts warn risks remain despite short-term relief for markets NEW YORK, April 10 (Reuters) - Wall Street traders and investors have been sent to the brink over the past week by President Donald Trump's tariff policy, scrambling to figure out strategies and calming clients as trillions were wiped off stock market values. A massive relief rally, however, comes with a caution sign. here. Since announcing sweeping tariffs on April 2, the S&P 500 has done a near round-trip of historic proportions. The benchmark index extended its slide from its February high to the brink of confirming a bear market, as investors priced in dire scenarios for the economy after Trump announced tariffs that would raise U.S. trade barriers to the highest levels in over a century. The Cboe Volatility index (.VIX), opens new tab, Wall Street's "fear gauge," soared earlier this week to its highest closing level since the COVID-19 pandemic five years ago. Then, in a stunning reversal on Wednesday, Trump said he would temporarily lower the hefty duties on dozens of countries while further ramping up pressure on China, prompting a massive relief rally, sending the S&P 500 up nearly 10%, its biggest one-day jump since October 2008. The rapid policy changes translated into non-stop action, stress and drama on trading floors and investment houses. "It's been a quite a wild ride," said Joe Tigay, portfolio manager for Rational Equity Armor Fund, who said it brought back memories of trading through massive swings during the pandemic. "Personally, honestly, this is what I live for." The rapid pace of unfolding events in recent days prompted a deft juggling of priorities, including client calls, trading and making sense of markets, said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group, as the market drama surpassed the wild trading seen during the COVID-induced market crash of March 2020. "This is more headline driven than what we saw in COVID," Murphy said. "There's just not enough time because you're going from one thing to the next." Clients wanted frequent updates as market losses stacked up, advisers said. "We reached out to as many clients as possible via a client letter and phone calls," said Gina Bolvin, president of Bolvin Wealth Management Group in Boston. "Some of my nervous clients were comforted when they learned that as the market was declining I had been investing some of my own money." But while some have embraced the volatility, others caution that the market remains fragile, U.S. policy remains unpredictable and that the U.S. is not out of the woods. "It's definitely good news because it shows that the negotiations are in good enough shape that they think that they've accomplished what they needed to by this initial conversation," said Mark Hackett, chief market strategist, Nationwide Investment Management Group in Philadelphia. "But I want to put a pretty big caveat out there because 8% rallies in 20 minutes in the Nasdaq aren't a heck of a lot healthier than 8% declines." TRUMP PUT BACK ON? After a week of concern that Trump was no longer worried about stock market losses, some investors speculated that markets had prompted Trump's decision, including a rout in the bond market that came to a head on Wednesday and led to a massive spike in Treasury yields. Investors had previously relied on the theory of a Trump put, a reference to investor belief that Trump would reverse policy if markets ran into trouble. "I think this is a reminder that Trump does not want a bear market in stocks, and he does not want a recession, so this is forcing a rethink of the approach," said Talley Leger, chief market strategist, The Wealth Consulting Group. But many investors said persistent uncertainty around tariff policy could still have broad fallout, impeding the ability of companies to plan and influencing consumer behavior. "They hit the pause button and the market rejoiced," said Alex Morris, chief investment officer at F/m Investments. "But of course, there is no promise that we'll manage to solve anything in 90 days." Deutsche Bank said in a note that while the Trump put appears back on, the policy back-and-forth will cause lasting damage. "Even if the tariffs are permanently suspended, damage has been done to the economy via a permanent sense of unpredictability in policy." Market volatility on Wednesday had been trained on the bond market, which saw a bruising selloff in U.S. Treasuries, with some market participants saying funds had been selling such liquid assets such as Treasuries to meet margin calls. "There's definitely sensitivity to what happens in the Treasury market," said Matt Orton, chief market strategist at Raymond James Investment Management. "If something breaks in the Treasury market, that could be very, very bad." Trump said on Wednesday the bond market had recovered well after investors became queasy about it in reaction to his tariffs. "The bond market now is beautiful," he told reporters. The White House said Trump's move to hike tariffs on China and pause tariffs on other countries came after receiving "good-faith commitments from a majority of our trading partners willing to strike favorable trade deals." "The only interest guiding President Trump's decision making is the best interest of the American people," White House spokesman Kush Desai said. "The Trump administration remains committed to using every tool at our disposal to address the national emergency posed by chronic trade deficits – including both tariffs and negotiations.' 'STRESSFUL WEEK' Some investors felt the relentless string of bad news for markets and wild gyrations were impossible to maintain. "We had assumed that some form of capitulation would be forthcoming," said Christopher Hodge, chief economist for the US at Natixis in New York, citing the financial carnage and expectation of economic pain. Since Trump unveiled his tariff plan on April 2, the stock market has undergone some record-breaking gyrations. It notched an 8.1% intra-day price swing in the benchmark S&P 500 index on Monday, while Tuesday's market saw one of the biggest reversals for the benchmark index in at least the last 50 years. Wednesday's market about-face was even more stark, with the day's 10.7% range stacking up as the fifth largest in at least the last fifty years. Bolvin said this had been "a stressful week." "When my 3 year old woke up and asked if the market was down, I knew we were close to the bottom," Bolvin said.
Reuters
08-04-2025
- Business
- Reuters
Tariff-driven Wall Street pain sparks investors to weigh more gloomy scenarios
NEW YORK, April 8 (Reuters) - A dramatic U.S. stock slide is fanning fears of even more dire scenarios for the market, as investors weigh the potential for a prolonged global trade war and a much dimmer corporate profit outlook. Stocks swung wildly on Monday, with the benchmark S&P 500 (.SPX), opens new tab down well over 4% at one point, as investors continued to grapple with President Donald Trump's sweeping tariffs that last week drove the biggest weekly drop for the stock market since the onset of the COVID-19 pandemic five years ago. With so much unclear about where the tariff battle will lead, Wall Street strategists contemplated how much more of a beating stocks could take, including that the S&P 500 could fall by nearly half from its February 19 all-time high. The index ended on Monday at 5,062.25, down more than 17% from that peak. Matthew Maley, chief market strategist at Miller Tabak, said a decline in the S&P 500 in coming months to 4,300 was "very possible," and a fall to 4,000 or lower was not out of the question. Trade tumult aside, Maley said, markets had been overly optimistic about the near-term profit potential from artificial intelligence and not properly factoring in weakening consumer behavior. "This is more than tariffs," he said. "This is the process of the market falling back in line with its underlying fundamentals." The worst-case scenarios from some analysts saw the S&P 500 dropping as much as roughly 50% from its all-time high, which would be akin to the aftermath of the bursting of the dot-com bubble in 2000. The recent drop has been one of the steepest concentrated selloffs for U.S. stocks, on par with the speed and intensity of drawdowns seen during the COVID-19 swoon in 2020 and the financial crisis slide in 2008, and has put the S&P 500 close to bear market territory. The S&P 500's combined 10.5% decline last Thursday and Friday was the index's fourth biggest two-day drop since 1950, according to Keith Lerner, co-chief investment officer with Truist Advisory Services. The biggest two-day falls occurred in March 2020, when COVID-19 was hitting; in November 2008, during the financial crisis; and in 1987, for the two-day period that included Wall Street's "Black Monday." Despite the wild swings on Monday, the S&P 500 ended down just 0.2%. Even so, the Cboe Volatility index (.VIX), opens new tab, Wall Street's "fear gauge," registered its highest closing level in five years. JPMorgan equity strategists on Monday outlined a year-end S&P 500 target of about 4,000 as their "bear case," which included assumptions of no tariff relief and a 2026 earnings view that implied two years of no real profit growth. Evercore ISI offered a "bear" outcome of 4,500 for the S&P 500 and a "SuperBear" case of 3,100, which would be a drop of nearly 50% from the February high. The SuperBear scenario involves a recession that takes down annual corporate profits by about 15%, as well as disruption in credit markets and difficulty raising the debt ceiling, Evercore strategists said in a note on Sunday. Michael Purves, CEO of Tallbacken Capital Advisors, said a combination of "some (valuation) contraction, some earnings contraction" could push the index down to 4,000. "It's not an unrealistic scenario at all," Purves said. Like Purves, investors pointed to two potential reasons that create the potential for further weakness in stocks: valuations that are moderating from expensive levels and the possibility of more severe cuts to earnings estimates. The forward price-to-earnings ratio for the S&P 500 fell from 22.4 times expected 12-month earnings in February, to 18.4 as of Friday, which is in line with the index's average P/E ratio of the past 10 years, according to LSEG Datastream. But the longer-term 40-year average P/E ratio is 15.8 -- still 14% below Friday's level. The P/E ratio sank to as low as 15.3 as recently as 2022, when the Federal Reserve was raising interest rates to bring down spiking inflation. Current valuations also are based on earnings expectations that many investors say have yet to adequately reflect the likely economic damage from the tariffs. S&P 500 earnings are still expected to rise 10.4% in 2025, according to an LSEG IBES report on Friday. However, during recessions, earnings fall at an average annual rate of 24%, according to Ned Davis Research. "If it's a 50% probability of recession, you've got to look at another 20%-25% down in equities from here," Colin Graham, head of multi-asset strategies at Robeco in London, said during trading on Monday. To be sure, even investors who feared steep fallout for stocks did not think these were the most likely scenarios. Evercore strategists, for example, on Sunday set a year-end price target of 5,600 for the S&P 500, or a 10% gain from current levels, even as they described more negative potential outcomes. Markets also could be poised to rally on any news of possible trade relief. Stocks briefly rose on Monday on a report that said Trump was considering a 90-day pause on tariffs, before the White House denied the report, sending the market lower. "The only thing that's going to help both sentiment and the market's direction is going to be some easing of the entrenched tariff views," said Michael James, managing director of equity trading at Rosenblatt Securities. "We're going to need some form of moderation on those tariff levels to have any potential for meaningful improvement."
