On Wednesday, President Trump sought to ease concerns as his contentious tariff policies continue to impact markets, with his extensive reciprocal duties now implemented across 185 countries.
“STAY CALM!,” Trump declared in a message on his social media platform, Truth Social. “Everything will turn out fine. The USA will emerge bigger and better than ever!”
Early Wednesday, stocks were attempting to recover after a significant sell-off that threatened to push the S&P 500 into bear market territory.
In the Treasury market, the 10-year yield (^TNX) experienced its largest three-day increase since December 2001, raising concerns on Wall Street regarding potential risks in the global financial landscape.
Despite a labor market in the U.S. that has largely remained stable leading up to Trump’s tariffs, Wall Street is jittery that changing trade dynamics could trigger a self-inflicted recession.
On Wednesday, China announced retaliatory tariffs of 84% on U.S. imports following the Trump administration’s implementation of a 104% duty on its exports to the U.S.
In another post on Truth Social on Wednesday, Trump suggested that the market presents a fantastic opportunity to buy.
Some strategists believe that a drop below 5,000 for the S&P 500 could signal a buying opportunity, especially after the index faced one of its worst two-day declines on record last Thursday and Friday.
“From my discussions with long-term investors, it seems they will start buying the S&P 500 at the 5,000 mark and will become more aggressive in the mid-4,000s,” Goldman Sachs partner John Flood noted in a client message on Tuesday.
However, some remain skeptical.
“Ultimately, a shift in the rhetoric will need to occur to act as a catalyst,” said Michael Kantrowitz, chief investment strategist at Piper Sandler, in an interview with Yahoo Finance.
“Many historical comparisons may or may not hold relevance today due to this truly unprecedented situation.”
A major concern is stagflation, a scenario where growth stagnates, inflation remains high, and unemployment rises.
The likelihood of such a scenario has become more apparent in Wall Street’s forecasts following a wave of disappointing data releases, compounded by recent trade shocks and other policy uncertainties, such as Elon Musk’s initiatives to reduce government jobs through his Department of Government Efficiency (DOGE).
“While it’s premature to fully grasp the economic consequences of a potential trade war, the ongoing tug-of-war between slowing growth and rising inflation is likely to continue causing volatility,” stated LPL Financial in a research note released on Monday.
