NEW YORK (AP) — U.S. stocks are falling in a manic Monday after President Donald Trump doubled down on his tariffs, despite seeing how much financial markets would love to see him do the opposite.
The S&P 500 was down 1.4% in midday trading, coming off its worst week since COVID began crashing the global economy in March 2020. The index, which sits at the heart of many investors’ 401(k) accounts, has lost nearly 20% since setting a record less than two months ago.
The Dow Jones Industrial Average was down 744 points, or 1.9%, as of noon Eastern time, and the Nasdaq composite was 1.1% lower.
Earlier in a heart-racing morning, the Dow fell as many as 1,700 points shortly after trading began, following even worse losses worldwide on worries that Trump’s tariffs could torpedo the global economy. But it suddenly surged to a leap of nearly 900 points before pulling back lower. The S&P 500 at one point went from a loss of 4.7% to a gain of 3.4%, which would have been its biggest jump in years.
The whipsaw swings shook the market as a White House account on X said a rumor circulating that Trump was considering a 90-day pause on his tariffs was “fake news.” That a rumor could move trillions of dollars’ worth of investments shows how hard investors are straining to see hopes that Trump may let up on his stiff tariffs, which have started a global trade war.
Within less than an hour of that “fake news” announcement, though, Trump threatened to raise tariffs further against China after the world’s second-largest economy retaliated last week with its own set of tariffs on U.S. products.
It’s all a slap in the face to Wall Street, not just because of the sharp losses it’s taking, but because it suggests Trump may not be moved by its pain. Many professional investors had long thought that a president who used to crow about records reached under his watch would pull back on policies if they sent the Dow reeling.
On Sunday Trump told reporters aboard Air Force One that he does not want markets to fall. But he also said he wasn’t concerned about a sell-off, saying “sometimes you have to take medicine to fix something.”
Trump has given several reasons for his stiff tariffs, including to bring manufacturing jobs back to the United States, which is a process that could take years. Trump on Sunday said he wanted to bring down the numbers for how much more the United States imports from other countries versus how much it sends to them.
“The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession,” JPMorgan CEO Jamie Dimon wrote in his annual letter to shareholders Monday. He’s one of the most influential executives on Wall Street. “Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.”
The financial pain once again hammered investments around the world. Stocks in Hong Kong plunged 13.2% for their worst day since 1997. A barrel of benchmark U.S. crude oil briefly dropped below $60 for the first time since 2021, hurt by worries that a global economy weakened by trade barriers will burn less fuel. Bitcoin sank below $79,000, down from its record above $100,000 set in January, after holding steadier than other markets last week.
Trump’s tariffs are an attack on the globalization that’s remade the world’s economy, which helped bring down prices for products on the shelves of U.S. stores but also caused production jobs to leave for other countries.
It also adds pressure on the Federal Reserve. Investors have become nearly conditioned to expect the central bank to swoop in as a hero during downturns. By slashing interest rates to make borrowing easier for U.S. households and companies, along with other more untraditional moves to juice the economy, the Fed helped the U.S. economy recover from the 2008 financial crisis, the 2020 COVID crash and other bear markets.
But the Fed may have less freedom to act this time around because the conditions are so much different. For one, instead of a coronavirus or a system built up on too much belief that U.S. home prices would keep rising, this market downturn is mostly because of economic policy from the White House.
Perhaps more importantly, inflation is also higher at the moment than the Fed would like. And while lower interest rates can goose the economy, they can also put upward pressure on inflation. Expectations for inflation are already swinging higher because of Trump’s tariffs, which would likely raise prices for anything imported.
“The idea that there’s so much uncertainty going forward about how these tariffs are going to play out, that’s what’s really driving this plummet in the stock prices,” said Rintaro Nishimura, an associate at the Asia Group.
If the S&P 500 finishes the day 20% below its record, it would be a big enough drop that Wall Street has a name for it. A “bear market” signifies a downturn that’s moved beyond a run-of-the-mill 10% drop, which happens every year or so, and has graduated into something more vicious.
Nathan Thooft, a senior portfolio manager at Manulife Investment Management, said more countries are likely to respond to the U.S. with retaliatory tariffs. Given the large number of countries involved, “it will take a considerable amount of time in our view to work through the various negotiations that are likely to happen.”
“Ultimately, our take is market uncertainly and volatility are likely to persist for some time,” he said.
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Kurtenbach reported from Bangkok. McHugh reported from Frankfurt, Germany. Associated Press writers Ayaka McGill, Paul Harloff, Matt Ott and Jiang Junzhe also contributed.
