Editor
Trump Tariff Talks Drive Market Volatility Despite Stock Recovery
US stocks regained ground on Tuesday following sharp losses, as investors continued navigating the uncertainty surrounding Trump tariff policies and global trade tensions. After Monday’s steep decline, the S&P 500 rose 1.8% by mid-afternoon, while the Nasdaq 100 and Dow Jones Industrial Average advanced 2% and 1.9% respectively.
White House Press Secretary Karoline Leavitt offered some reassurance during a news briefing, stating that progress is being made on trade deals and that the “ball is moving in the right direction with China.” This followed reports that the administration is nearing general trade agreements with Japan and India, potentially easing some Trump tariff concerns.
Treasury Markets Stabilize After Monday’s Volatility
The Treasury market showed greater stability compared to Monday’s turbulence, which was triggered by speculation that President Donald Trump might attempt to replace Federal Reserve Chair Jerome Powell. While the 10-year Treasury yield remained relatively unchanged, two-year yields increased to 3.82% following lackluster demand at an auction.
Similar to the previous session, Tuesday’s significant stock movements occurred amid lighter-than-usual trading volume—approximately 13% below recent averages for Nasdaq 100 shares—potentially amplifying market swings.
Experts Urge Caution During Trump Tariff Uncertainty
“We are in a period of extreme uncertainty, where one should not react too much to daily moves,” advised Anwiti Bahuguna, Northern Trust Asset Management’s CIO of global asset allocation, during a Bloomberg Television interview on Tuesday.
The Trump tariff rhetoric has forced investors to reassess traditional safe-haven assets like the dollar and Treasuries. The International Monetary Fund warned that the latest escalation in trade tensions risks economic damage to both China and the United States, with potential for worsening conditions beyond 2025.
Notable Stock Movements Amid Trump Tariff Concerns
Among individual stocks:
- All members of the Bloomberg Magnificent Seven Index traded higher
- 3M Co. gained up to 8.6% after maintaining its annual guidance while acknowledging risks from the trade war
- Northrop Grumman Corp. declined 13% after missing profit expectations and reducing its earnings forecast
- RTX Corp. shares fell 10% after warning that tariffs pose a significant risk to operating profit
- Verizon Communications Inc. dropped 0.3% following larger-than-expected declines in mobile subscribers
Central Bank Commentary and Trade Negotiations
ECB President Christine Lagarde indicated the bank has nearly achieved its 2% inflation target but emphasized the need for flexibility amid volatile economic conditions. Fed Vice Chair Philip Jefferson discussed how the central bank’s goals support economic mobility, while Philadelphia Fed President Patrick Harker noted limitations in using the federal poverty line to measure economic stability.
Despite ongoing Trump tariff concerns, some market participants remain optimistic about trade negotiations with allies. Stuart Kaiser, head of equity trading strategy at Citigroup Inc., stated on Bloomberg Television: “We are looking at more successful trade negotiations with key trading allies. I put Europe, India, Japan, South Korea, Australia in that category. I think we will see good progress there and that is good for markets.”
US-India Trade Progress
The US reported “significant progress” toward a bilateral trade deal following discussions between Vice President JD Vance and Indian Prime Minister Narendra Modi. Vance encouraged India to purchase more American goods, particularly energy and military equipment, addressing Trump’s frequent criticism of India’s high tariffs.
Market Metrics
As of 2:05 p.m. New York time:
- S&P 500: up 1.8%
- Nasdaq 100: up 2%
- Dow Jones Industrial Average: up 1.9%
- MSCI World Index: up 1.3%
- 10-year Treasury yield: down one basis point to 4.40%
- WTI crude: up 2.2% to $64.46 a barrel
- Gold: down 0.7% to $3,399.25 an ounce
- Bitcoin: up 4.8% to $91,554.39
