Investors Find Respite Amid Market Volatility
After a sharp decline in the past three trading sessions, Wall Street investors were desperately searching for relief—and it seems they’ve temporarily found it.
On Tuesday, Dow Jones futures surged by 700 points, equivalent to a 1.8% increase. Meanwhile, S&P 500 futures climbed 1.3%, and Nasdaq futures gained 1%.
In recent days, stock prices took a significant hit amid fears that President Donald Trump’s tariff policies could drive the US and global economies into recession. However, after enduring this market turmoil, investors appeared eager to explore new purchasing opportunities.
The S&P 500’s price-to-earnings ratio fell below 17 by Monday’s close—a historical low—enticing investors to acquire what they perceived as undervalued stocks.
Despite this, there are no assurances that stocks will continue to rise. Having imposed a sweeping 10% tariff on all imports to the US on Saturday, the Trump administration is preparing to introduce more substantial tariffs on numerous countries. These tariffs, mischaracterized by Trump as “reciprocal,” could reach as high as 50% for a select few nations, with potential tariffs on China escalating to approximately 70%.
Trump has also threatened an additional 50% tariff on China if the nation fails to retract the retaliatory tariffs announced on Friday. China’s finance minister responded on Tuesday, vowing to “fight to the end” in the trade war and continue opposing Trump.
Several Wall Street banks, including Goldman Sachs and JPMorgan Chase, have predicted over the past week that escalating trade tensions could steer the US and global economies toward recession this year, further dampening stock demand.
Although the current market rebound may be fleeting, some in the Trump administration were quick to declare triumph.
“The market is finding its bottom,” proclaimed Peter Navarro, Trump’s chief trade adviser, on Fox News Monday evening. “It’s going to shift, and S&P 500 companies will be the first to produce here. They’re the ones who will lead the recovery. And it will happen. Dow 50,000—I guarantee it, and no recession.”
Contrasting Navarro’s upbeat outlook, JPMorgan Chase CEO Jamie Dimon cautioned in his annual letter to shareholders that Trump’s tariffs would inflate prices, slow down the global economy, and weaken America’s global standing by dismantling alliances. Even some of Trump’s supporters, such as Elon Musk and Bill Ackman, have recently criticized tariffs as flawed policy based on unsound logic.
Still, global stock markets experienced an upswing on Tuesday.
Most Asian stock indices concluded the day on a higher note. Japan’s Nikkei 225, representing over 200 of the nation’s largest listed companies, rose by 6%. South Korea’s Kospi increased by 0.3%, while Australia’s ASX 200 strengthened by 2.3%. Hong Kong’s Hang Seng Index, comprising top companies from Hong Kong and mainland China, closed about 1.5% higher Tuesday. The previous day, it had endured its steepest daily drop since the 1997 Asian financial crisis, declining by more than 13%.
In Europe, the STOXX 600 index gained 1.4%. France’s CAC index climbed 1.6%, Germany’s DAX by 1.3%, and London’s FTSE 100 index bolstered by 1.9%.