US stocks suffered a volatile session of trading on Monday that resulted in a major drop.
The White House took a defiant position after the unexpectedly high tariffs were implemented on US trading partners. This triggered the market collapse.
As the tensions in the trade war increased, US President Donald Trump also threatened to increase tariffs against China.
A false report earlier today, claiming that US tariffs could be delayed for a while, temporarily relieved investors.
The White House quickly denied the report and caused the markets to decline again. Since April 2, the day that new US tariffs were announced, global markets have experienced turmoil.
The Dow Jones Industrial Average fell 2.3%, or about 900 points at the time this article was written.
The benchmark index had fallen more than 1000 points in earlier part of the day. S&P 500 fell 1.6% while Nasdaq Composite dropped 0.7%.
This sell-off is a continuation from the drop that started after Wednesday’s close.
Investors are in panic ever since. “Recession fears are on the rise, and expectations for rate reductions from central banks like the Federal Reserve have skyrocketed,” says David Morrison of Trade Nation, a senior analyst.
Markets are currently pricing in the Fed to cut rates by 25 basis points at their next meeting, which will be held on November 15.
The CME FeedWatch Tool also suggests that by the end the year, the Fed Funds Rate will be reduced to an area of between 3.00 and 3.25%.
Traders wanted to ‘buy a dip’ as both the S&P 500 & NASDAQ were already down from the respective records highs they had reached in mid-February.
Morrison:
Anyone expecting clarification after the announcement on Wednesday was disappointed. Tariffs are more aggressive than expected, and Trump’s indifference to the stock market is painfully evident.
Stocks of restaurants fall
Investors were concerned about a possible recession and weaker consumer demand, which led to a drop in restaurant stocks during morning trading.
As the market reacted against the Trump tariffs, shares of restaurants including McDonald’s and Chipotle fell.
Analysts predict the tariffs will not have a significant impact on restaurants.
They do, however, anticipate that the increase in prices of other goods will reduce consumer spending and confidence.
Starbucks, for example, may see a slight increase in the cost of coffee beans but the greater concern would be if their demand for drinks decreased, particularly as they are already trying to boost customer traffic at their US operations.
Chipotle shares dropped 4%, and McDonald’s fell over 1%. Starbucks stock dropped more than 5% Monday.
Apple shares drop sharply by 6%
Following Trump’s Truth Social posting, in which he threatened an additional tariff of 50% on Chinese products unless Beijing lifted its retaliatory duties on US goods.
On Truth Social, President Obama announced that the US would impose an extra 50% tariff on Chinese products if China did not remove its 34% counter-tariff imposed by it late last week.
Trump wrote: “All talks with China regarding their requests for meetings with us, will also be ended!”
Tesla stock drops 7%
Tesla stock dropped by nearly 7% in line with the general market decline.
Wedbush Analyst Dan Ives, an ardent Tesla optimist and well-known analyst, revised his price targets downwards. Ives said that this was due to the “self-created branding issues” Tesla currently faces.
Brand issues can be caused by a variety of things, such as recent controversy surrounding Tesla Autopilot, build quality issues and customer service problems, or Elon Musk’s unpredictable social media behavior.
The stock may have declined due to these issues, which could be attributed to a negative impact on consumer confidence and investor sentiment.
Tesla is still a major player on the market for electric vehicles, despite these obstacles. It has a strong customer base and brand recognition.
Even in the face of market instability and concerns about brand, investors are still attracted to this company because it has ambitious plans for expansion and innovative technology.
The post This Post Dow Slides Nearly 900 Points, S&P500 Falls 1.6% As Trade War Fears Intensify Apple and Restaurant Stocks Tumble may be updated as new information becomes available
