US stocks swung violently, wiping out a 4% plunge to rise more than 3% before turning negative again as investors reacted to a swirl of headline related to President Donald Trump’s trade policies.
The S&P 500 Index was down 0.6% as of 10:22 a.m. in New York, after sinking 10% in the previous two sessions. The Nasdaq 100 Index soared 3%, after the tech-heavy gauge entered a bear market on Friday. The small-cap focused Russell 2000 rose 2%. The S&P 500 index at one point fell more than 20% from its February record, meeting a definition of a bear market.
Stocks notched multi-percentage point moves in the first hour of trading, after a wild ride overnight that saw futures plunge and equities tumble around the globe. The Cboe Volatility Index, or the VIX, jumped above 50, the highest level since the start of the Covid pandemic.
Trump administration officials have taken to TV this morning in attempts to reassure investors that the harsh tariff policies won’t derail the economy, even as experts warn growth will contract and inflation will spike higher.
“It doesn’t take but a modicum of good news to see the kind of aggressive bounce that we’re seeing,” said Art Hogan, chief market strategist B Riley Wealth.
Strategists continued to downgrade their views on US stocks, with JPMorgan Chase & Co. slashing its year-end forecast for the S&P 500 Index to 5,200 from 6,500. They joined a slew of Wall Street banks that have reduced their expectations for US equities, including Evercore ISI, Goldman Sachs Group Inc., Barclays and Yardeni Research.
Meanwhile, hedge funds recorded their largest-ever one-day net sales of global equities on the first day of trading after Trump’s sweeping tariffs announcement, according to Goldman Sach prime brokerage desk.
UBS trading desk warned the S&P 500 can fall to 4,675, the index’s 200-week moving average. It’s very much in play as the market re-focuses on earnings and the multiple, both which are too high in a recessionary backdrop, Michael Romano, head of hedge fund equity derivative sales at UBS Securities wrote.
“Scenarios of the S&P 500 in the mid-4000s are not unreasonable,” wrote Citigroup Inc.’s Stuart Kaiser on Sunday.
Traders boosted expectations for the Fed to cut interest rates this year. Markets priced 125 basis points of easing by year-end, equivalent to five quarter-point moves. Those bets come despite comments from Federal Reserve Chair Jerome Powell, who on Friday played down the prospect that the central bank will be cutting rates anytime soon.
Investors are keeping a close eye on Trump’s meeting with Israel Prime Minister Benjamin Netanyahu, who will be the first foreign leader to sit down with the US president since last week’s tariff announcement. Israel is hoping for a trade deal after saying it would cancel customs duties on US products.
“Any deal that would not be incremental or significantly newsworthy is going to bode badly for the market,” said Aoifinn Devitt, chief global market strategist at Moneta Group Investment Advisors Inc. “There are no areas completely safe in the stock market.”
Top Trump officials, including Treasury Secretary Scott Bessent, dismissed investor fears of inflation and slower growth, offering no apologies for the market turmoil and defiantly insisting a boom is on the horizon.
Meanwhile, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon urged a quick resolution to the uncertainties sparked by President Donald Trump’s tariffs and warned against a potentially “disastrous” fragmentation of America’s long-term economic alliances. Hedge fund billionaires Bill Ackman and Stanley Druckenmiller criticized Trump’s decision to launch global tariffs, which have caused market chaos.
Many economists expect tariffs to fuel a price shock. A 10% universal tax on imports would imply a 1 percentage point increase in US consumer prices from its latest reading of 2.8%, estimates compiled by Ned Davis Research show. Goldman Sachs Group Inc. economists raised their recession probability to 45% from 35% and lowered their 2025 Q4-to-Q4 GDP growth forecast to 0.5% from 1%.
“Trump officials say they aim to make Main Street wealthy again even if that’s bad for Wall Street,” Ed Yardeni of Yardeni Research wrote in a note to clients. “The problem is that Main Street owns lots of equities traded on Wall Street, so the two streets prosper and suffer together.”
The uncertainty has unleashed volatility on global financial markets. The volume of options on US exchanges topped 100 million for the first time as traders rushed for protection.
The derivatives market is pricing more volatility ahead, according to Piper Sandler. Options activity suggests traders expect the S&P 500 to swing 5.6% this week — the highest since the depths of the pandemic. On Monday alone, the benchmark equities index is implied to swing 3.3% in either direction.
Hedge funds have ramped up short selling at an unprecedented pace amid the market turmoil, with short selling in US macro products, such as indexes and ETFs jumping to the highest weekly volume on record last week, according to Goldman Sachs Group Inc.’s latest prime brokerage data. And fund managers recorded their largest-ever one-day net sales of global equities on the first day of trading after President Donald Trump’s sweeping tariffs announcement.
A rout on Friday flushed out equity positioning to the bottom of its typical range, data compiled by Deutsche Bank AG show. Earlier, fund managers yanked $4.7 billion out of US stocks in the week through April 2, according to EPFR Global.
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