The US inventory market’s downturn deepened on Monday, with consumers reluctant to step in regardless of hypothesis of attainable commerce agreements and indicators that Europe could also be able to ease tensions, adopting a much less confrontational tone.
Unconfirmed reviews that White Home financial adviser Kevin Hassett had floated a attainable 90-day pause on new tariffs provided a quick flicker of hope, however that optimism rapidly pale.
S&P 500 touches 14-month low and enters bear market
By 16:30 Central European Time, the S&P 500 had fallen 1.3% to five,010 factors, its lowest stage since early 2024, extending the index’s cumulative losses to just about 12% since final week’s tariff announcement – certainly one of its steepest drops in post-war historical past, rivalling the sell-offs of October 1987 and the 2008 world monetary disaster.
From its February peak, the benchmark index is now down 20%, marking the onset of a technical bear market.
Losses continued to be widespread throughout US indices, with the Dow Jones Industrial Common down 2% and the tech-heavy Nasdaq 100 slipping 1%.
Mega-cap tech shares remained beneath stress. Tesla dropped 5.5% on the day and has now halved in worth since its 2024 highs. Apple misplaced 3.5%, bringing its whole decline to 30% from peak ranges.
In distinction, traders sought refuge in defensive and counter-cyclical names. Greenback Tree gained 7%, whereas Brown-Forman Corp rose 4.7% and GE Vernova climbed 4.4%, as traders rotated into sectors perceived as extra resilient throughout financial downturns.
Trump defends tariffs amid backlash
Final week, Donald Trump introduced a brand new wave of sweeping tariffs concentrating on a variety of products from China, the European Union, and different main buying and selling companions.
On Monday, Trump posted a message on social media Fact platform, saying: “International locations from everywhere in the World are speaking to us. Robust however honest parameters are being set. Spoke to the Japanese Prime Minister this morning… The one approach this downside could be cured is with TARIFFS, which at the moment are bringing Tens of Billions of {Dollars} into the usA.”
Trump additional defended the tariff technique. “The US has an opportunity to do one thing that ought to have been carried out DECADES AGO,” he wrote, whereas criticising commerce imbalances with China, the EU and Japan.
“Don’t be Weak! Don’t be Silly! Don’t be a PANICAN,” Trump declared, coining a brand new time period for these opposing his commerce insurance policies. He claimed the tariffs had been already producing “Tens of Billions of {Dollars}” for the U.S. and known as them “a phenomenal factor to behold.”
Main world funding banks have swiftly revised their financial forecasts in gentle of the developments.
Goldman Sachs lifted its US recession likelihood to 45%, citing draw back dangers from commerce disruption and weakening company confidence. JP Morgan went additional, assigning a 60% probability of recession over the subsequent twelve months.
Europe opens to decrease commerce obstacles
The market shock follows Trump’s abrupt declaration of wide-ranging tariffs on international items — a protectionist transfer that has drawn world scrutiny. Whereas the administration stays steadfast, indicators of a extra conciliatory tone have emerged from Europe.
European Fee Vice President and commerce chief Maroš Šefčovič expressed readiness to barter.
“We’re prepared to debate zero-for-zero tariffs not just for vehicles but in addition for different industrial merchandise,” he mentioned, including that €380 billion value of EU exports to the US, representing about 70% of the bloc’s whole exports, at the moment are topic to tariffs.
But, he criticised the shortage of progress in talks with Washington, stating: “Regardless of EU efforts, now we have not seen engagement which might result in a mutually acceptable resolution.” He additionally pushed again towards criticism of Europe’s value-added tax (VAT) regime, stressing its fiscal significance to member states. “VAT is a crucial supply of revenue of EU member states, and we won’t change our VAT system.”
“Markets are reacting to crucial paradigm shift since World Struggle 2,” Šefčovič mentioned.
European equities solely barely rebounded on the information. The Euro STOXX 50 was 3.4% decrease, trimming heavier declines throughout the session.
