US stocks fluctuate sharply due to tariffs on Wall Street

US stocks fluctuate sharply due to tariffs on Wall Street

U.S. stock markets were extremely volatile on Monday - falling, rising and swinging in all directions as traders looked for signs that President Donald Trump's tariffs could be negotiated or suspended.

Market developments and international effects

Markets worldwide had slumped earlier in the day amid concerns about the impact of Trump's extensive tariffs on the global economy and economic growth. U.S. stocks opened the day in bear market territory but rebounded an hour later as rumors emerged that the Trump administration may suspend tariffs for several months.

Rumors and market reactions

However, these rumors turned out to be untrue; A White House spokesman called the suggestion that Trump would suspend tariffs “fake news.” Despite hopes that some trading partners, including the EU, might be willing to negotiate with Trump, the president dashed détente hopes when he said he could impose another 50% tariff on China.

The Dow Jones, which had risen almost 900 points, quickly fell again. The Dow was last down 840 points, or 2.2%, while the broader S&P 500 fell 1.7% and the Nasdaq Composite fell 1.5%.

Volatile markets and investor psychology

The wild fluctuations in the markets illustrate how much investors are hoping that Trump will pause his trade policy. US stocks rebounded from their lows and were even briefly positive as rumors of a tariff break emerged. However, this rally proved to be short-lived as traders realized that nothing official had been announced.

"This was a good example of what could happen if we actually mix some rational thinking with the ignorant tariff policy," said Art Hogan, chief market strategist at B. Riley Wealth Management, in a telephone interview with CNN. "Market watchers have signaled loudly that we need to integrate rational thinking into this trade policy. So far there has been nothing of the sort."

Market movements and economic forecasts

The S&P 500 hit its daily low at 9:43 a.m. (ET) and then rose on rumors of the possible tariff break, reaching its daily high at 10:17 a.m. (ET). In just 30 minutes, the S&P 500 rose 8.5%, representing a massive market move, before the index gave back its gains.

“This was a huge move off the lows,” Joe Saluzzi, partner and co-founder of Themis Trading, noted to CNN.

European Union shows willingness to negotiate

One positive on Monday morning was Ursula von der Leyen, a senior EU official, saying the EU was "ready to negotiate" and offering to eliminate tariffs on US industrial goods.

Market behavior and political uncertainty

The S&P 500 fell into bear market territory at the start of trading - down 20% from a recent peak - before recovering. The decline in US stocks became noticeable after a historic slump in Asia and massive losses in Europe.

Wall Street has seen massive losses in US stocks in recent days, which also led the Nasdaq into the bear market. Despite recent losses, investors may sense a buying opportunity. With the rapid selling, shares are trading at a historically low 15 times forward earnings estimates, which could fuel a market rally if investors believe the shares are oversold.

The strategic cards in the trade crisis

The uncertainty created by the Trump administration over its mixed messages on tariff negotiations is adding to the bearish sentiment. On Wednesday, America will impose significantly higher "reciprocal" tariffs on dozens of countries that have the largest trade imbalances with the United States. In a note to investors, Goldman Sachs said that if Trump followed through on these threats, it would plunge the U.S. and global economies into recession.

Trump has continued to hint that he would be willing to negotiate with China and the European Union to close the trade gap with the United States. As the stock market comes back from its extensive declines, Trump may receive the message that he can stand his ground and weather the market storm.

"The tariffs are coming. (Trump) announced it and it wasn't a joke," Commerce Secretary Howard Lutnick said recently.

This story will be continually updated.