News

(Bloomberg) -- Another volatile day on Wall Street pushed the S&P 500 Index back to the brink of a bear market as the Trump administration doubled down on its plans to enact hefty tariffs that threaten to send the American economy into a recession.

The S&P 500 fell 1.6% in a fourth straight session that has seen moves of at least 4% from peak to trough. The index powered higher by as much as 4% in early trading on optimism that President Donald Trump would negotiate lower rates on key allies.

Those hopes faded throughout the day White House officials confirmed a 104% levy on imports from China would start at midnight, while China dug in with threats to retaliate. Treasury yields rose after a three-year note auction went off poorly and measures of credit spreads tightened anew. China’s offshore currency tumbled.

All 11 S&P 500 sectors finished lower. The index ended down almost 19% from its February record, posting the worst four-day run since March 2020. The Nasdaq 100 declined 2.0%. On Semiconductor, Intel Corp. and Microchip Technology Inc. sank at least 8% to lead a rout in chipmakers. Apple Inc. and Tesla Inc. slid more than 4.5%. The Dow Jones Industrial Average increased 0.8% and the Russell 2000 Index dropped 2.7%. The Cboe Volatility Index spiked above 50, a level associated with extreme market stress.

“Traders were overenthusiastic about this morning’s rally, which then succumbed under the weight of negative news flow: 104% Chinese tariffs, a record low Yuan, and a sloppy 3-year auction,” wrote Steve Sosnick, chief strategist at Interactive Brokers.

US Trade Representative Jamieson Greer told a Congressional hearing on Tuesday that President Donald Trump made clear he won’t issue tariff exemptions in the near term. In addition to the 104% duty on China, Vietnam will be hit with a 46% levy and imports from Japan face a 24% tax.

“Right now we’re watching investors try to assign logic to a market that’s being driven more by vibes than valuation,” said Dave Mazza, chief executive officer at Roundhill Financial Inc. “The S&P briefly tumbled into bear territory, and everyone’s pretending there’s a playbook for this. There isn’t.”

Seema Shah, chief global strategist at Principal Asset Management, wrote that “market concerns are likely to persist as long as President Trump’s approach to negotiations with China remain unconstructive.”

To Nomura Securities’ Charlie McElligott, tariffs will drag growth lower in the weeks and potentially months ahead, regardless of occasional rallies driven by short covering and potential mechanical flows.

The stock market is particularly vulnerable to wild swings due to a combination of thin liquidity and headline-driven algorithmic trading. According to Goldman Sachs Group Inc.’s trading desk, the gap between market volume and liquidity in S&P 500 futures is currently the widest in the bank’s data set.

“Liquidity is terrible so anyone with just a decent-sized order is going to move the market,” said Brent Kochuba, founder of SpotGamma.

From a technical analysis prospective, the S&P 500 broke below its support level of 5,000, plunging again into a deeply oversold territory. The index’s 14-day relative strength index sank to 20.7.

Another test for stocks starts this Friday as earnings season kicks off, starting with results from big US banks including JPMorgan and Wells Fargo & Co.

For the first quarter, analysts now see year-over-year earnings growth of 6.7% for the S&P 500, down from about 11.1% in early November when Trump was elected, according to data compiled by Bloomberg Intelligence. For all of 2025, they see profits rising 9.4%, compared with a forecast of 12.5% at the beginning of the year.

Delta Air Lines Inc., CarMax Inc. and Constellation Brands Inc. also report earnings this week, and are expected to discuss the wide-ranging impact of tariffs on their customers and supply chains at earnings calls.

--With assistance from Jan-Patrick Barnert, Geoffrey Morgan and Michael Msika.

(Updates stock moves. A previous version of this story corrected the headline to show stocks pared gains.)