Benchmark indices saw wild swings on Monday to end what was a dismal quarter on Wall Street a day ahead of US President Donald Trump’s reciprocal tariff announcements.
The Dow Jones recovered 900 points from the day’s low to end with gains of over 400 points. The S&P 500 and the Nasdaq also clawed back their losses from earlier in the session. Investors seeking safer bets led to a surge in Dow constituents Coca-Cola and Walmart.
US shares saw their worst quarter compared to the rest of the world since 2009.
Energy producers joined a rally in oil as Trump suggested the US may work to curtail crude shipments from Russia. A gauge of the “Magnificent Seven” megacaps extended a quarterly rout to 16% amid lingering concerns of an artificial-intelligence bubble.
It was the first time since the onset of the pandemic in March 2020 that bonds rose and stocks fell in a three-month period. The dollar, long a go-to hiding place during market selloffs, has not been acting as such lately. While the greenback saw a mild gain Monday, it suffered the worst start to a year since 2017.
The Trump administration’s mixed messaging on what new tariffs will be unveiled Wednesday and how they’ll be announced have traders flustered as they try to position around the biggest risk confronting the market in years.
Trump’s top spokesperson said the announcement would feature “country-based” tariffs, but added that the president is also “committed” to implementing sectoral duties at another time.
“Tariffs will likely continue to drive the market discussion,” said Chris Larkin at E*Trade from Morgan Stanley. “Whether tariffs are more or less rigid than expected could go a long way toward shaping the market’s near-term momentum.”
The yield on 10-year Treasuries declined three basis points to 4.22%. The Bloomberg Dollar Spot Index rose 0.2%. Gold topped $3,100 for the first time.
Ed Yardeni of eponymous firm Yardeni Research cut his year-end estimate on the S&P 500 to 6,000 from 6,400, saying Trump’s tariffs have heightened recession risks. The gauge close at 5,611.85 Monday.
“A happy outcome would be that the US would negotiate tariff reductions, but that won’t happen if the US slaps a 20% tariff on all imports across-the-board,” Yardeni said.
Amid all the concern about the economic impacts of tariffs, Goldman Sachs Group Inc.’s David Kostin now expects the S&P 500 to end the year around 5,700 versus his previous estimate of 6,200.
A stock-market signal is flashing a warning to investors hoping for a speedy recovery from this year’s sharp equity selloff.
The correlation between individual S&P 500 — measuring the degree to which they move in tandem — stands near the lowest level in 25 years even after rising this month, according to data compiled by independent strategist Jim Paulsen.
The S&P 500 briefly sank below the first ominous milestone traders were watching at the start of the session — 5,504.65, the intraday low touched on March 13. But the broad equities benchmark quickly reclaimed that level. The question now is whether it stays there.
Technical strategists also recommend keeping an eye on market breadth, looking for more evidence of washed-out conditions. A 10% or less reading in the percentage of stocks trading above their 20-day moving average would be “a good sign of a capitulation,” said Adam Turnquist, chief technical strategist at LPL Financial.
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