U.S. stocks ended Tuesday in a downswing, capping a volatile session that began with hopes of new-found clarity on the president’s tariff policies.
The Dow industrials rose 1,461 points early on, reflecting investors’ faith that the administration may deliver on talk of potential trade deals. The closed down 0.8%. The S&P 500 fell 1.6%, and the Nasdaq dropped by more than 2%, after each had rallied more than 4% earlier. The tech-heavy Nasdaq blew its biggest intraday gain since at least 1982.
“I don’t think we’ve seen the bottoms yet,” said Donald Calcagni, chief investment officer at Mercer Advisors. “We are still early innings on this whole tariff issue, and it’s going to take some time to play out.”
Tuesday’s enthusiasm started when Treasury Secretary Scott Bessent said the Trump administration was open to negotiating to reduce tariffs, saying the U.S. could “end up with some good deals.”
President Trump said he spoke with South Korea’s president and that the administration was in discussions with “many” nations.
The ecstatic tone didn’t last the morning, though. U.S. Trade Representative Jamieson Greer said Trump won’t provide exemptions to his new global tariffs for individual products or companies. Stocks declined from their highs at midmorning.
Stocks extended their pullback from earlier highs Tuesday afternoon with a fresh selloff in the tech favorites that led the market advance the past two years. Apple was down nearly 5%.
The retreat followed a Fox Business report that extra tariffs on China went into effect at noon, citing the White House press secretary. The White House said tariffs would go into effect Wednesday as planned, further hitting sentiment.
Markets gyrated wildly Monday, driven in part by hopes for tariff resolution that turned out to be unfounded, before ultimately settling largely unchanged.
The administration also signaled it was open to discussing lower tariffs with Japan, Israel and some other countries. Japanese stocks jumped after Bessent said the country would be prioritized in trade talks.
Meantime, Beijing lashed back at Trump’s threat of even higher tariffs on China, raising the specter of an all-out trade war between the world’s two biggest economies. “If the U.S. insists on its own way, China will fight to the end,” the country’s Commerce Ministry said.
Trump said he will slap an extra 50% tariff on China if Beijing didn’t drop plans to retaliate against extra levies he announced last week.
In a sign Beijing is digging in for a protracted battle, the government threw its weight behind the stock market and devalued the yuan against the dollar, pulling a reference rate below a key threshold for the first time since the fall of 2023.
In Tuesday’s trading:
U.S. stock indexes fell. The Dow industrials declined 0.8%, with the S&P 500 falling about 1.6% and the Nasdaq Composite ending 2.2% lower.
Treasury yields continued higher. Ten-year yields rose to about 4.26% after settling Monday at 4.164%, after their sharpest one-day rise in a year.
The WSJ Dollar Index weakened.
Japan’s Nikkei 225 shot up 6%, after selling off Monday. Other Asian stocks mostly rose, as did European ones, led by the defense sector.
Indonesia’s stock market tumbled on reopening after a holiday that began before last week’s “Liberation Day.” Indonesia was one of several Southeast Asian economies Trump targeted with hefty levies.
—By Joe Wallace and Vicky Ge Huang
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