Stocks Around the World Slide on Trade-War Fears: Markets Wrap

(Bloomberg) — Stocks got hammered across the board as concerns about the impacts of a trade war on the global economy spurred a flight to short-term bonds, gold and haven currencies. Oil slumped.

From New York to London and Tokyo, equities fell — with the S&P 500 erasing its $3.4 trillion post-election rally. That was after the US imposed the largest set of new tariffs in nearly a century, slapping levies on a broad swath of goods from China, Canada and Mexico that spurred swift reprisals. The trade tension fueled worries about growth, with traders fully pricing in three quarter-point rate cuts by the Federal Reserve in 2025.

The moves — before President Donald Trump’s address Tuesday night to Congress — mark a new phase in Trump’s broadening economic and diplomatic reset of America’s place in the world. Treasury Secretary Scott Bessent said that there would be a transition period as the tariffs kick in this month and next, but he argued that the market selloff was only temporary.

To Clark Geranen at CalBay Investments, it’s extremely difficult for investors to make investing decisions off of tariff news, and they should avoid making any drastic portfolio moves at this stage.

“While Tuesday’s tariffs are a go, it remains very unclear on just how long these tariffs will remain,” he said. “We tend to believe these are more of a negotiation tactic and not the start of a long and drawn out reciprocal trade war. Still, in these situations, investors sell first and ask questions later.”

The S&P 500 fell 1.9%. The Nasdaq 100 lost 1.7%. The Dow Jones Industrial Average slid 1.7%. A gauge of the Magnificent Seven megacaps sank 2.8%. The Russell 2000 slid 2.4%.

The yield on 10-year Treasuries dropped four basis points to 4.11%. A dollar gauge was little changed. Mexico’s peso led losses in major currencies, while Canada’s loonie fluctuated. The Swiss franc and the Japanese yen climbed.

Derivatives indexes measuring perceived risk in the US corporate credit market widened.

Trump’s return to the White House was cause for celebration on Wall Street on bets the administration would juice the economy. Even as enthusiasm eased as the calendar turned to 2025, stocks remained at or near all-time highs. The S&P 500 hit a record on Feb. 19, putting it up 6.3%, or about $3.4 trillion, since Election Day. 

Two weeks later, those gains are gone. The index is virtually unchanged since the day Americans went to the polls four months ago. 

To Chris Zaccarelli at Northlight Asset Management, the market finally took the Trump administration at its word, and the realization that the tariff talk wasn’t just a negotiating tactic is starting to sink in.

“The caution we have been advocating all year has largely been ignored by the market, but nothing that is happening today is a surprise – these tariffs were well telegraphed – but investors haven’t been willing to believe Trump was serious, even though he has said many times that this was what he was going to do,” he added.

Nancy Tengler at Laffer Tengler Investments says it’s “always excruciating” to be in the middle of a market correction — which she thinks that’s where equities are.

“This time, of course, it’s spurred by the tariffs,” she noted. “And I think we have to analyze not just what the tariffs will be, but how long we think they’re going to last. I hope we start to get some indication if they’re short lived. If it is short lived this is just an opportunity to buy stocks for the long term.”

“On a short-term basis, while we wait for the markets to bottom, the next leg lower could prove sinister,” said Dan Wantrobski at Janney Montgomery Scott. “So folks should remain on guard for some big moves in our opinion.” 

He noted that while the “buy side” has done a good deal of paring down their technology exposures, they remain overweight US equities in general- which comes alongside some of the heaviest positioning seen on the retail side in years. 

“This again presents a good deal of potential firepower in the event that selling pressure gains more momentum from here,” Wantrobski added. “We have not seen any signs of panic yet, and selling has been rather orderly and on moderate volume.”

Corporate Highlights:

• Apple Inc. rolled out a new iPad Air with a faster processor, enhancing a device that helped lift holiday sales despite an iPhone slump.
• Mars Inc. is talking to investors on Tuesday about selling around $26 billion of bonds to help finance its purchase of foodmaker Kellanova, according to people with knowledge of the matter, in what would be the biggest corporate bond sale of the year.
• Target Corp. is projecting little to no sales growth this year, a concerning sign for a big-box retailer that’s struggling to shake off a lengthy slump.
• Best Buy Co. said shoppers will remain constrained by inflation this year as it forecast that annual sales could be little changed.
• Sycamore Partners is nearing an acquisition of Walgreens Boots Alliance Inc., people with knowledge of the matter said, in a deal that could end the drugstore operator’s tumultuous run as a public company.
• Honeywell International Inc. will pay $2.16 billion in cash to purchase Sundyne, the maker of pumps and compressors owned by private equity firm Warburg Pincus.
• China banned the import of Illumina Inc. gene-sequencing machines as part of a wave of retaliatory measures against fresh US tariffs on all Chinese goods.
• JetBlue Airways Corp. was downgraded to hold from buy at Deutsche Bank AG.
• Okta Inc., an infrastructure software company, reported fourth-quarter results that beat expectations and gave an outlook that is above the analyst consensus.
• Aramco plans to trim the world’s biggest dividend, lowering a key source of funds for Saudi Arabia’s budget while relieving stress on its own finances.

Key events this week:

• China Caixin services PMI, Wednesday
• Eurozone HCOB services PMI, PPI, Wednesday
• US ADP employment, ISM services index, factory orders, Wednesday
• Fed’s Beige Book, Wednesday
• Eurozone retail sales, ECB rate decision, Thursday
• US trade, initial jobless claims, wholesale inventories, Thursday
• US Treasury Secretary Scott Bessent speaks, Thursday
• Fed’s Christopher Waller and Raphael Bostic speak, Thursday
• Eurozone GDP, Friday
• US jobs report, Friday
• Fed Chair Jerome Powell gives keynote speech at an event in New York hosted by University of Chicago Booth School of Business, Friday
• Fed’s John Williams, Michelle Bowman and Adriana Kugler speak, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1.9% as of 10:22 a.m. New York time
• The Nasdaq 100 fell 1.7%
• The Dow Jones Industrial Average fell 1.7%
• The Stoxx Europe 600 fell 2.2%
• The MSCI World Index fell 1.9%
• Bloomberg Magnificent 7 Total Return Index fell 2.8%
• E-Mini Russ 2000 Mar25 fell 2.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2% to $1.0503
• The British pound was little changed at $1.2703
• The Japanese yen rose 0.8% to 148.25 per dollar

Cryptocurrencies

• Bitcoin fell 4.1% to $81,831.45
• Ether fell 3.3% to $2,039.88

Bonds

• The yield on 10-year Treasuries declined four basis points to 4.11%
• Germany’s 10-year yield declined three basis points to 2.46%
• Britain’s 10-year yield declined seven basis points to 4.48%

Commodities

• West Texas Intermediate crude fell 1.8% to $67.17 a barrel
• Spot gold rose 0.3% to $2,902.65 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Margaryta Kirakosian, Julien Ponthus, Sujata Rao and Aya Wagatsuma.

©2025 Bloomberg L.P.