Stocks Tumble as Tariff War Overshadows Solid Jobs: Markets Wrap

(Bloomberg) — Stocks tumbled around the world, bonds surged and oil hit a four-year low, with China stepping up its the fight against President Donald Trump’s trade war to intensify concerns about the economy despite signs of a solid jobs market.

Following a rout that sent the S&P 500 to its worst day since 2020, the equity benchmark slumped 3%. European shares headed for a correction. Treasury 10-year yields sank nine basis points to 3.93%. Money markets fully priced four quarter-point rate reductions this year and the chance of a fifth. Credit fear gauges soared the most since the banking meltdown in 2023. The VIX index of equity volatility briefly topped 45, evoking memories of some of the worst market turbulences.

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US job growth beat forecasts in March and the unemployment rate edged up, pointing to a healthy labor market before the global economy gets hit by widespread tariffs. China retaliated against new US levies with a slew of measures, including duties on all American imports and export controls on rare earths. Trump said his economic policies “will never change.”

“The jobs report came in much higher than forecast,” said Larry Tentarelli at Blue Chip Daily Trend Report. “On the surface, this appears to be a bullish number, but it is important to understand that this is backwards looking data. Markets are going to be much more concerned with incoming, future data, and our concern here is that the higher-than-expected tariffs are going to lead to a major slowdown in hiring.”

With global financial markets in a tailspin, investors now turn to a speech by Federal Reserve Chair Jerome Powell for clues on the state of the US economy and whether tariffs will shape the Fed’s stance on easing.

Several forecasters are turning ice cold on US equities, telling investors to refrain from buying the selloff as Trump’s historic trade war raises the specter of recession.

Bank of America Corp.’s Michael Hartnett became the latest to recommend investors “short” risk assets until the Trump administration pivots away from tariffs and toward tax cuts, higher energy supply, deregulation and an aggressive increase in the debt ceiling. UBS Global Wealth Management’s Mark Haefele cut his rating on US stocks to neutral.

Nouriel Roubini predicted that the stock market correction may deepen before investor sentiment then stabilizes as US President Donald Trump dials down his global trade onslaught.

 “The correction can be slightly more, given uncertainty,” Roubini said at a gathering of economists and business leaders on the banks of Lake Como in Cernobbio, Italy. “Even if in the next few weeks it looks like we’re going to start negotiations, and you get a de-escalation, I think the market corrects a little bit more, bottoms out.”

A few others are finding opportunities. Ed Yardeni of eponymous firm Yardeni Research said it was time to buy the dip after the gauge’s worst day since the Covid pandemic.

Wall Street has been befuddled by Trump’s vision of bringing manufacturing operations back to the US, something that would be extremely costly and take years if not decades to accomplish.

Economists generally expect that tariffs will lift inflation and slow growth, keeping the Fed in wait-and-see mode. But the debate over the path of interest rates has ramped up after the tariff announcement. While Morgan Stanley now expects no cuts this year, down from one previously, citing inflation risks, UBS Global Wealth Management see more easing this year.

In the US, Fed officials have said that a resilient labor market and sticky inflation mean they can afford to stand pat, even as Trump’s tariffs sapped consumer and business confidence,

The S&P 500 is down from its February record and on track for a sixth week of losses in the past seven. Fund managers yanked $4.7 billion out of US stocks in the week through April 2 in the second week of outflows, data compiled by EPFR Global and Bank of America show.

Traders have been taking profits and rotating into more defensive sectors amid fears of a recession and concerns about a potential pullback in spending on artificial intelligence infrastructure.

In the corporate world, technology megacaps including Nvidia Corp., Tesla Inc. and Apple Inc. slumped. US-listed Chinese stocks like Alibaba Group Holding Ltd. and Baidu Inc. also slumped.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 3.1% as of 9:43 a.m. New York time
• The Nasdaq 100 fell 3.3%
• The Dow Jones Industrial Average fell 2.7%
• The Stoxx Europe 600 fell 4.4%
• The MSCI World Index fell 3.6%
• Bloomberg Magnificent 7 Total Return Index fell 3.7%
• The Russell 2000 Index fell 4.5%

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%
• The euro fell 0.2% to $1.1031
• The British pound fell 0.7% to $1.3010
• The Japanese yen rose 0.5% to 145.34 per dollar

Cryptocurrencies

• Bitcoin rose 0.2% to $82,448.57
• Ether fell 0.9% to $1,781.05

Bonds

• The yield on 10-year Treasuries declined nine basis points to 3.93%
• Germany’s 10-year yield declined 11 basis points to 2.54%
• Britain’s 10-year yield declined five basis points to 4.47%

Commodities

• West Texas Intermediate crude fell 8% to $61.58 a barrel
• Spot gold fell 1.2% to $3,077.60 an ounce

This story was produced with the assistance of Bloomberg Automation.

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