Wall Street suffered significant losses on Tuesday as fears of a global trade war intensified. Investors grew increasingly concerned that U.S. trade tariffs could dampen economic growth, leading to broad market declines.
Citigroup shares plummeted 7.4%, while JPMorgan Chase lost 4.8%. Auto stocks also took a hit, declining by more than 3%. The Dow Jones Industrial Average tumbled 698.44 points, or 1.62%, closing at 42,492.80. The S&P 500 dropped 88.03 points, or 1.50%, to 5,761.69, while the Nasdaq Composite shed 210.73 points, or 1.15%, to 18,139.46.
Gold Surges as Investors Seek Safe Havens
Gold prices rose on Tuesday, buoyed by a weaker U.S. dollar and increased safe-haven demand. Spot gold climbed 0.9% to $2,918.90 per ounce by 09:12 a.m. ET (1154 GMT), while U.S. gold futures advanced 1% to $2,929.20 per ounce. Silver also saw gains, with spot silver rising 0.7% to $31.89 an ounce.
Oil Prices Drop as OPEC Confirms Production Increase
Oil prices declined after OPEC reaffirmed plans to increase production starting in April, responding to mounting pressure from the U.S. to curb fuel costs. Brent crude fell 2.4% in afternoon trading to $69.94 per barrel, marking its lowest level since September. Meanwhile, West Texas Intermediate (WTI) dropped nearly 2% to $69.04 per barrel.
Wall Street Sell-Off Deepens as Trade Tensions Escalate
The ongoing trade dispute between the U.S. and its trading partners has triggered a sharp two-day sell-off, with the Dow Jones shedding a total of 1,300 points. On Tuesday alone, the Dow lost 650 points, while the S&P 500 erased all gains made since Donald Trump’s election, declining another 1.3%. The Nasdaq fared slightly better, closing with a 0.4% loss. At its lowest point during the session, the Dow was down nearly 850 points, and the S&P 500 had fallen 2%. Four out of five S&P 500 stocks ended the day in the red.
The trade war took a more aggressive turn on Tuesday as retaliatory measures came into play. China imposed additional tariffs of up to 15% on select U.S. goods, while Mexican President Claudia Sheinbaum announced plans for countermeasures over the weekend. Tensions between the U.S. and Canada also escalated, with the White House threatening further tariffs in response to Canada’s 25% levy on American products.
Possible Tariff Relief on the Horizon?
Despite the turmoil, there are indications that a compromise might be in the works. U.S. Commerce Secretary Howard Lutnick hinted at possible tariff relief, suggesting that the Trump administration could outline a plan to ease tariffs on Mexican and Canadian goods under the North American free trade agreement as early as Wednesday. He noted that the adjustments would likely be a partial rollback rather than a full reversal.
Historically, the stock market has served as a barometer for Trump’s economic policies. Some investors speculate that steep market declines could push the administration to reconsider its tariff stance.
“Where’s the Trump Put?” asked Tom Essaye of The Sevens Report, referring to the notion that Trump would intervene to prevent excessive stock market losses. He pointed out that during the first wave of trade tensions, market declines of around 10% prompted policy shifts. The S&P 500 has now dropped approximately 6% from its all-time high.
Nancy Tengler of Laffer Tengler Investments noted that while market corrections are painful, they may present long-term buying opportunities if the tariffs are short-lived.
However, Dan Wantrobski of Janney Montgomery Scott warned of potential volatility ahead, advising investors to brace for further market swings. “While we wait for the markets to bottom, the next leg lower could prove to be severe,” he cautioned.
As the S&P 500 nears its 200-day moving average, analysts like Jonathan Krinsky of BTIG are questioning whether a bottom is in sight. “The key question isn’t whether we bounce at the 200-DMA, but what happens after the bounce,” he said. “Investors are used to quick recoveries, but we must remain open to the possibility of a more drawn-out bottoming process.”
