Wall Street weakened on Monday as global investors skeptical about U.S. investment, which many economists see as a trade war between U.S. President Donald Trump and his ongoing criticism of the Fed.
The S&P 500 sank 2.4% in another elimination. Two months ago, this brought the index below 16% of its record.
The Dow Jones industrial average fell by 971 points, or 2.5%, while losses from Tesla and NVIDIA helped to reduce the Nasdaq composite by 2.6%.
In Canada, the major S&P/TSX composite index fell 0.76% today.
Perhaps even more worrying is that as the US market retreats prices, the value of U.S. government bonds and the dollar have also sunk. This is an unusual move because the value of U.S. Treasury and U.S. dollar has been historically strengthened in the midst of a tense episode. However, this time experts say it was Washington’s policies that caused fear and could undermine their reputation as the safest investment in the world.
Trump gave a tough speech to global trade on Monday as economists and investors continue to say his imposition of stiff tariffs could lead to a recession if they don’t back down. Macquarie strategist Thierry Wizman said last week’s negotiations with Japan failed to reach a quick deal to lower tariffs and protect the economy, and they were seen as “test cases.”
“The golden rule of negotiation and success: people who own gold have set the rules,” Trump wrote in all capital letters on his Truth Social Network. He also said, “Businessmen who criticize tariffs are bad business but really bad politically.”
Investors around the world are raising alarms after the third day of market chaos related to tariffs, with one of the billionaire Trump allies even warning that not backing down on tariffs could release a “self-caused nuclear winter.”
Trump has been keeping his speech recently as he has focused more on the world’s second largest economy. China warned other countries on Monday against reaching a trade deal with the United States “at the expense of China’s interests” as Japan, South Korea and others attempted to negotiate the deal.
“If this happens, China will never accept it and will firmly adopt a reciprocal countermeasure,” the Ministry of Commerce of China said in a statement.
Concerned about Trump’s anger at Fed Chairman Jerome Powell. Trump once again criticized Powell for not cutting interest rates as soon as possible to make the economy more juice.
The Fed is too fast to lower interest rates because it doesn’t want to
Three years ago, it almost dropped to its 2% goal.
Trump also mentioned Powell in a social media post Monday afternoon when he posted about a slowdown in the U.S. economy, “Unless Mr. is too late, this is a major loser, and now lowers interest rates.”
A move Trump takes toward Powell could bleed through financial markets. While Wall Street prefers lower prices, mainly because they raise stock prices, the bigger concern is that less independent Fed will not be as effective in controlling inflation. Experts fear such a move could further undermine the United States’ reputation as the safest cash location in the world, even if it wasn’t killed.
All uncertainty in the center of financial markets hits the pillars means some investors say they have to rethink
How to invest in the fundamentals.
“We can no longer infer from past trends and can’t rely on long-term assumptions to anchor portfolios,” BlackRock Investment Institute strategists said in a report. “The difference between tactical and strategic asset allocation is vague. Instead, as we understand more about the future state of the global system, we need to continually reevaluate the long-term trajectory and dynamically allocate through asset allocation.”
According to strategists at Jean Boivin, this in turn could push investors outside the United States to keep more money in the local market.
Leading in large-scale technology
On Wall Street, Big Tech Stocks will lead the index later this week in its latest earnings report.
Tesla sank 5.7%. Electric Vehicle stocks are criticizing their stock price overpriced compared to December’s record, and their brand has been intertwined with Elon Musk, who led the U.S. government’s efforts to cut spending.
Chip maker NVIDIA fell 4.5% for the third consecutive time as he revealed that export restrictions on U.S. chips could hurt its first-quarter results of $5.5 billion. They led another Wipeout on Wall Street, where 92% of stocks in the S&P 500 fell.
Among the few winners are Discovery Financial Services and Capital One Financial, which climbed after the U.S. government approved its proposed merger. Discover Rose 3.6%, while Capital One increased by 1.5%.
Current18:49What does stock market chaos mean to your money?
Trump’s global tariffs have sparked a collapse in the stock market, and many Canadians are worried about their investments, their pensions, and what it means to the cost of daily living. Guest host Mark Kelley, along with senior corporate journalist Peter Armstrong at CBC and the economist’s Ordnance Armine Yalnizyan, breaking down how this will affect the average Canadian.
Unlike some others, gold has also climbed its reputation as a safe haven investment.
In the bond market, shorter U.S. fiscal yields have fallen as investors expect the Fed to lower its major overnight interest rate later this year to support the economy.
But long-term yields rise, doubting the United States’ position in the global economy. The 10-year Treasury yield rose to 4.40%, up from 4.34% last weekend, from about 4% earlier this month. This is a major move for the bond market.
Meanwhile, the value of the US dollar violates the euro, yen, Swiss franc and other currencies. Canadian dollar traded us for 72.36 cents, up from our 72.17 cents Thursday.
