Highlights
Stocks on Thursday gave back about a third of Wednesday's rally as risk aversion returned and investors refocused on the reality of the trade war with China, the threat of US recession and rising inflation. Many traders doubted the rally would continue and instead used Wednesday's rally as an opportunity to sell at better levels.
The Dow Jones industrial average fell 2.5 percent, the S&P 500 lost 3.5 percent, and the Nasdaq was off 4.3 percent. Long end US bond yields ended higher while shorter maturity yields declined. Oil prices fell while the dollar dropped across the board.
Investors evidently concluded the economy is far from out of the woods despite President Trump's abrupt reversal on much of his tariff plans. News from the White House that the tariff on Chinese goods would rise to a whopping 145 percent, rather than the 125 percent it said Wednesday, renewed the market's worries about the impact of tariffs. That joined ongoing concern about tariffs that have already been implemented, including levies on imported autos, steel and aluminum. Markets don't like the lack of visibility on what will happen next, and observers are asking whether in 90 days the world will be back to the massive reciprocal tariffs imposed last week. Sharp losses in the dollar and a selloff in long-term Treasury debt on Thursday reflect a very worrisome loss of confidence in US assets in light of Trump's management of the economy.
Among stock sectors, consumer staples outperformed in a defensive play. On the downside, weakest sectors included energy, consumer discretionary, technology, communications, materials, financials, and industrials.
The Dow Jones industrial average fell 2.5 percent, the S&P 500 lost 3.5 percent, and the Nasdaq was off 4.3 percent. Long end US bond yields ended higher while shorter maturity yields declined. Oil prices fell while the dollar dropped across the board.
Investors evidently concluded the economy is far from out of the woods despite President Trump's abrupt reversal on much of his tariff plans. News from the White House that the tariff on Chinese goods would rise to a whopping 145 percent, rather than the 125 percent it said Wednesday, renewed the market's worries about the impact of tariffs. That joined ongoing concern about tariffs that have already been implemented, including levies on imported autos, steel and aluminum. Markets don't like the lack of visibility on what will happen next, and observers are asking whether in 90 days the world will be back to the massive reciprocal tariffs imposed last week. Sharp losses in the dollar and a selloff in long-term Treasury debt on Thursday reflect a very worrisome loss of confidence in US assets in light of Trump's management of the economy.
Among stock sectors, consumer staples outperformed in a defensive play. On the downside, weakest sectors included energy, consumer discretionary, technology, communications, materials, financials, and industrials.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
