Sickenin' Stock Succession
Global stock markets experience a massive selloff amid Trump's tariff announcements, causing US stock futures to nosedive.
Here's a rundown of what's going down in the world of finance:
Market Meltdown
President Donald Trump's hefty tariff decision sent shockwaves through global markets on Sunday, as US stock futures hinted at another rough day when the market reopens on Monday. After last week's two-day market disaster that torched over $5.4 trillion in market value, it appears we're in for a rocky ride.
If the Dow futures' 3.3% plummet is any indication, it's a chilly start to the week. S&P 500 futures are taking a 3.7% hit, while tech-heavy Nasdaq futures are reeling with a 4.6% drop.
Asian markets are reporting a bloodbath on Monday, with Japan's Nikkei plunging 8% at the opening bell, tripping market circuit breakers to temporarily halt trading. Hong Kong's Hang Seng Index tumbled 13% in one of its steepest single-day falls ever.
European markets followed suit, plunging about 5%. The Stoxx 600, FTSE 100, Germany's DAX, and French and Italian markets all took a downward spiral.
Tariff Timeline
Trump's economy-railing tariff kicked off on Saturday following his executive order signing earlier in the week. This across-the-board tax targets all imports entering the United States.
Higher "reciprocal" tariffs directed at nearly 90 nations with significant trade imbalances with the US are set to hammer almost 90 countries on Wednesday. These tariffs could skyrocket to as high as 79% for countries like China.
China has dished out its retaliation. Starting Thursday, China will implement a whopping 34% tariff on all goods imported from the United States, fanning fears of a devastating trade war.
Commerce Secretary Howard Lutnick made it clear on CBS's "Face the Nation" on Sunday: "The tariffs are coming. He ain't kiddin'. The tariffs are coming, and let me tell ya, they ain't playin' around." Lutnick also shot down rumors about any potential postponement: "No dilly-dallying. They're definitely sticking around for days and weeks."
Economic Damage
The price of US oil dropped by over 3%, sinking below $60 per barrel for the first time since April 2021. This sell-off reflects investors' fears that tariffs might push the global economy into a recession, reducing demand for fuel essential for transportation, travel, and shipping.
Bitcoin took a dip, tumbling 5.6% to $78,736.93. This slump comes after a post-election surge above $100,000, where crypto enthusiasts had hoped Trump would lend his support to cryptocurrencies.
JPMorgan analysts painted a grim picture last week. They estimated that Trump's tariffs will jack up taxes on Americans by a whopping $660 billion each year – the largest tax hike in recent memory. They projected prices will skyrocket, adding 2% to US inflation.
The nonpartisan Tax Foundation calculated that the average American household will shell out an additional $2,100 annually thanks to the tariffs. They project America's average import tax will balloon to 19% this year, the highest rate since 1933.
According to the Tax Foundation, Americans' after-tax incomes will shrink by an average of 2.1% this year due to the tariffs.
JPMorgan raised its odds of a recession to 60%, while Goldman Sachs boosted its probability of a recession within the next 12 months to roughly 35%.
The Dow closed in correction territory on Friday, plummeting more than 10% from its December record high – the first time the index has closed in correction in over three years. The Nasdaq closed in a bear market for the first time since 2022, sagging more than 20% from its December zenith.
The S&P 500, which has plummeted 17.4% since its all-time high on February 19, is set to open on Monday in bear market territory – defined as a 20% drop from peak.
Federal Reserve Chair Jerome Powell acknowledged on Friday that Trump's tariffs – more aggressive than the central bank anticipated – would drive prices higher and slow economic growth. Powell suggested the Fed was keeping an eye on the situation but wasn't poised to leap into action.
Trump has retained a feisty demeanor amidst the market chaos. On Truth Social on Saturday, he wrote: "THIS IS A FULL-BLOWN ECONOMIC REVOLUTION, AND WE WILL FCKING WIN. STICK TO IT. It won't be easy, but the end game will result in a fcking HISTORIC victory. We will f*cking MAKE AMERICA GREAT AGAIN!!!"
On Sunday evening aboard Air Force One, Trump told reporters: "What's going to happen with the market? I can't tell ya, but I can tell ya, our country has gotten a lot tougher, and eventually it'll be a f*cking COUNTRY LIKE NO OTHER."
When pressed about addressing the market plunge, Trump said sometimes you need to "swallow a pill" and specified that no deal with China would materialize unless the United States' trade deficit was addressed.
Trump claimed he's been receiving calls from tech execs and world leaders about the tariffs. "I've spoken to many countries. Let me tell ya, they're all trying to schmooze me, very, very nice, very, super-nice," he said.
Trump added he's open to negotiations, particularly regarding the trade deficit with China and the European Union: "I want to solve the fcking deficit problem we have with China, with the European Union and other countries, and they're going to have to fcking do that. Now, if they want to chat about that, I'm down for a f*cking chat."
Some market analysts see potential buying opportunities emerging from the selloff. James Demmert, chief investment officer at Main Street Research, noted: "We're getting damn near a bottom. The fact that stocks have plummeted so much in these deep intraday dives indicates indiscriminate and fear-based selling. When this happens, we usually see rallies."
- The rapid increase in inflation could affect personal finance, as JPMorgan analysts predict prices will skyrocket by 2% due to President Trump's tariffs, possibly adding to the cost of general-news items and business expenses.
- In the realm of investing, Bitcoin experienced a dip of 5.6%, following a post-election surge, amidst fears of economic instability caused by the tariffs and the potential for a devastating trade war.
- The imposition of tariffs also has political implications, with Commerce Secretary Howard Lutnick stating unequivocally that the tariffs are coming, and there is no dilly-dallying regarding their implementation.
- The financial turmoil has been widely reported in general-news media, with analysts discussing potential buying opportunities emerging from the selloff, as well as the possibility of a recession, with JPMorgan raising its odds of a recession to 60%.
