- Early optimism gave way to a sharp selloff as news broke of a 104% tariff on China taking effect Wednesday.
- The S&P 500 closed down 1.6%, Nasdaq fell 2.1%, and the Dow slipped 0.8% after being up over 1,300 points intraday.
- Traders cite FOMO and tariff headlines as key drivers of massive intraday volatility.
- Treasury yields climbed as investors balanced growth fears with inflation risk.
Full Story:
Wall Street’s hopes for a “Turnaround Tuesday” came crashing down late in the session as renewed tariff fears stomped out a blistering morning rally.
Early in the day, stocks surged on speculation that negotiations between the U.S. and China might ease the intensifying trade war. But by the closing bell, the optimism had fully evaporated—replaced by the harsh reality of impending tariff hikes.
The S&P 500 (^GSPC) dropped 1.6% to close at 4,982.77, its lowest closing level since April 19, 2024. The Nasdaq Composite (^IXIC), driven by weakness in tech, sank 2.1%, and the Dow Jones Industrial Average (^DJI) shed 320 points (0.8%) after briefly soaring more than 1,300 points in early trade.
“At the slightest whiff of good news, people come roaring back in because that FOMO [fear of missing out] never goes away,” said Steven Sosnick, chief strategist at Interactive Brokers, in a morning interview with Yahoo Finance. “No one ever wants to miss a rally.”
The day’s reversal was abrupt.
Stocks began tumbling after the White House confirmed near midday that the U.S. would hike tariffs on Chinese imports to 104% at midnight Wednesday, solidifying what President Trump described as a “reciprocal reset” of trade terms. The confirmation snuffed out hopes that negotiations might delay or dilute the planned tariffs.
Market Sentiment: Unsteady and Reactive
The major indexes turned negative within an hour of the tariff announcement and extended losses during the final trading hour. The broader market has now recorded four consecutive down days, with tariffs dominating headlines and investor psychology.
Tuesday’s volatility followed a chaotic Monday session in which the S&P 500 swung 8% in just 15 minutes on false rumors that the White House would delay the tariffs. The administration later labeled the reports as “fake news,” triggering another selloff.
“It’s headline whiplash,” said Mark Newton, Fundstrat’s head of technical strategy. “We need to see some evidence of real negotiation very, very quickly.”
Broader Economic Implications
The latest tariff move comes amid already fragile investor sentiment following last week’s plunge—Wall Street’s worst since March 2020. The S&P 500 dropped over 10% on Thursday and Friday alone, as investors reassessed the economic damage of a full-blown trade war.
Beyond equities, bond markets also saw sharp moves. The yield on the 10-year U.S. Treasury (^TNX) rose 10 basis points to 4.25%, reversing its initial drop as investors shifted between fear of slowed growth and expectations of prolonged inflationary pressures.
Bigger Picture: Trade Fears Rule the Tape
The turbulence underscores just how much the current market environment is tethered to geopolitical developments rather than fundamentals. Earnings season has taken a backseat, and economic data has been largely ignored in the face of escalating trade tensions.
“Right now, the direction of stocks is all about tariff negotiations,” Newton emphasized.
With no clear resolution in sight, investors may need to brace for more violent swings in the days ahead. As Trump continues to double down on his trade strategy, the market’s fate may hinge less on economic performance and more on policy moves from Washington.
Market Close – April 8, 2025:
- S&P 500: 4,982.77 (-1.57%)
- Nasdaq Composite: -2.13%
- Dow Jones Industrial Average: -0.83% (−320 pts)
- 10-Year Treasury Yield: 4.25% (+10bps)
More from GlobalFinServe:
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- Asian leaders respond to shifting trade landscape
- Tariff war timeline – Key moments so far
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