US stock markets experienced significant volatility on Monday following ongoing developments in trade policy, including new tariff measures introduced by President Donald Trump.
The S&P 500 index, which tracks 500 major US companies, ended the day down approximately 0.2%. Earlier in the day, it had experienced wide fluctuations in trading activity, reminiscent of the market turbulence seen during the onset of the Covid-19 pandemic.
Despite heightened tensions, the market appeared to stabilize somewhat amid expectations that the US administration could shift focus from tariffs to potential trade negotiations. Treasury Secretary Scott Bessent stated that the US had initiated talks with Japan and planned discussions with additional trading partners.
President Trump indicated that while some tariffs may become permanent, others could be subject to negotiation. He also declined to delay recently announced tariffs affecting goods imported from multiple countries.
According to the White House, over 50 countries have reached out to initiate discussions on trade. European Union officials also signaled interest in negotiations. EU trade representative Maroš Šefčovič said he anticipated talks would take place in the near future.
The announcement of new tariffs last week triggered sharp declines in global markets. Both US and UK indices experienced their steepest single-day losses since the early months of the Covid-19 pandemic in 2020. Over the past three days, the S&P 500 has dropped more than 10%, marking one of the sharpest downturns since the 2008 financial crisis.
Market analysts cited concern over the broader economic impact of rising tariffs. Mike Mussio, president of FBB Capital, described the policy direction as “frustrating” for investors.
Several prominent business figures, including Jamie Dimon, Bill Ackman, and Daniel Loeb, have voiced concerns as market losses continued.
President Trump, however, reaffirmed his position on trade measures. On Monday, he threatened to increase tariffs on Chinese imports by an additional 50% unless China retracts its own retaliatory tariffs introduced last week. This would bring the total effective tax on certain Chinese goods entering the US to over 100%, accounting for previous rounds of tariffs imposed earlier this year.
China’s retaliatory move — a 34% tariff on US goods — has raised fears of an escalating trade dispute between the two nations. Economists warn that unresolved tensions could have broad implications for the global economy.
“Investors are concerned about the potential impact on corporate earnings and the possibility of a significant slowdown in economic growth,” said Russ Mould, investment director at AJ Bell.
During Monday’s trading session, the S&P 500 briefly dropped more than 20% from its February peak, meeting the definition of a “bear market.” However, speculation that the White House might pause tariff implementation led to a sudden recovery, with the index climbing more than 7% in a short period.
Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, described the market swings as unusual, noting the high degree of uncertainty.
At the close of trading, the Dow Jones Industrial Average had fallen 0.9%, while the Nasdaq Composite remained largely unchanged, rising 0.1%.
In Europe, markets also closed lower. London’s FTSE 100 declined 4.4%, its lowest level in over a year. Markets in Paris and Berlin experienced similar losses, while major indexes across Asia also fell sharply.
Commodity prices reacted to the uncertainty. Oil prices dropped more than 4% before partially rebounding. Copper, widely regarded as a barometer for industrial activity, fell around 3%. Gold prices, often viewed as a safe-haven asset, also declined.
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