U.S. stocks took a sharp tumble on Monday morning as market losses around the world deepened. The downturn followed President Trump’s weekend remarks indicating that his administration’s controversial “reciprocal” tariffs aren’t likely to be lifted in the near future.
The Dow Jones Industrial Average dropped by 1,323 points, a fall of 3.3%, building on last week’s dramatic two-day slide of nearly 4,000 points.
The S&P 500 shed 3.5%, slipping into bear market territory, while the Nasdaq 100 also took a hit, falling 3.8%.
“The uncertainty of trading partner retaliation is still weighing on the markets,” Richard Saperstein, chief investment officer at Treasury Partners, wrote in a client note.
He continued, “Markets won’t rebound until tariffs are negotiated and reduced, until valuations move even lower to very compelling levels, and until fundamentals improve and none of these factors are in the cards at this time.”
Hopes had been high among investors that other countries would move swiftly to the bargaining table, helping the U.S. steer clear of the fallout from Trump’s aggressive new tariff structure — which includes a standard 10% import tax and significantly steeper penalties for certain countries. Economists have cautioned that these measures could spark renewed inflation.
When questioned over the weekend about the widespread sell-off in international markets, Trump replied, “sometimes you have to take medicine to fix something.”
Adding to investor unease, major financial institutions such as JPMorgan and Goldman Sachs have revised their forecasts, increasing the probability of a recession to 60% and 45%, respectively.
At the same time, the threat of retaliatory action by America’s trade partners added to the volatility, particularly after China imposed a retaliatory tariff of 34% on U.S. goods on Friday.
Analysts say these tariffs could deal a serious blow to American businesses with substantial domestic production, including consumer giants like Coca-Cola.
{Matzav.com}