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New York
UJ
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A random social media rumor just provided what appears to be a glimpse into Wall Street’s future. For President Donald Trump, this could be an opportunity to emerge as a hero to the market — if he is paying attention.
On Monday, stocks plummeted as investors worldwide struggled to grasp the extent of the tariff damages inflicted by Trump on the global economy. Major indexes on Wall Street opened over 3% lower, falling into bear-market territory — over 20% below their most recent peak just seven weeks prior.
It seemed like yet another day of significant market losses triggered by last week’s tariff announcement.
But less than an hour after the market opened, stocks dramatically shifted direction, surging 8% within minutes. (This kind of spike is uncommon on a regular trading day.)
However, this brief positive momentum was short-lived — ignited by a false rumor that Trump was considering a three-month postponement of the tariffs. (The unverified report appeared to originate from a minor account on X, and as of Monday night, it was still unclear how it made it to a CNBC ticker.) Once traders discerned the lack of truth, they swiftly sold off again, returning stock tickers to a landscape of declines.
Strange. But potentially enlightening, if Trump is tuned in.
That momentary surge of buying excitement indicated a potential escape route that rarely (if ever) presents itself during such severe market downturns. This turmoil stemmed from Trump — not due to a pandemic, warfare, or the collapse of financial structures — and with a single statement, he could rectify it all.
Traders jumped on the misleading headline because they are eager for any indication — any indication — that rationality might penetrate Trump’s thinking. A delay would grant businesses breathing room to adjust their supply chains and mitigate the impact of tariffs. Just a hint that the White House is open to negotiating with trade partners could help reduce the losses.
Yet the much-needed rationality is not approaching. At least not for now. Moreover, the administration is already facing backlash for the market downturn, so there seems little incentive to pivot, Mike O’Rourke, chief markets strategist at Jones Trading, shared on Monday.
The Trump administration is fulfilling its commitments made over the past few months. It’s just that Wall Street didn’t anticipate the tariffs being as extreme as they now are, nor did they expect Trump to act so recklessly concerning the stock market — which he once regarded as a real-time evaluation of his presidency.
“I think it’s becoming clear that they’re going to follow through on these measures,” O’Rourke remarked. “As we approach earnings season, it’s reasonable to assume every company will share negative forecasts… There isn’t much to be optimistic about, except for the announcement of some trade agreement that provides a clear direction forward.”
The mixed signals from the White House regarding tariffs are complicating investors’ outlooks.
While Commerce Secretary Howard Lutnick and White House trade adviser Peter Navarro informed outlets over the weekend that the tariffs would proceed, Trump himself suggested on Sunday that he was open to negotiations, revealing that he had received calls from tech leaders and global officials throughout the weekend. (UJ has reported ongoing discussions between the Trump administration and Israel, Vietnam, and India regarding possible tailored trade agreements.)
Amid the uncertainty coming from Washington, some on Wall Street are advocating for a clear message to be sent to the president and his administration: Don’t buy the dip.
As stock prices are lower than they were a week ago, it would be typical for investors to stray from the sell-off and pick up some assets at a discount. However, diving into dip-buying could inadvertently reward Trump for risking the global economy. Just as with training a puppy, sometimes a negative consequence is necessary to break bad behavior.
“We need this market to crash — to maintain pressure on the administration,” Ed Yardeni, president of Yardeni Research, stated to my colleague Matt Egan on Monday. This perspective is notably striking, especially from a well-respected analyst like Yardeni, who holds a Ph.D. in economics from Yale.
