US stocks resume slide amid gloom over Trump tariffs, recession

NEW YORK — The global stocks meltdown continued at Wall Street's open on Monday as President Donald Trump showed no sign of backing away from his sweeping tariff plans, and investors bet the mounting risk of recession could see the Federal Reserve cutting interest rates as early as May.

The S&P 500 opened down more than 3%, extending last week's selloff and poised to confirm it was in a bear market should it close 20% down from February's record high.

The Dow Jones Industrial Average was down 1,200 points, and the Nasdaq composite was 4% lower.

Trillions of dollars have been vaporized from equity values around the world after Trump's administration announced outsized tariffs on almost all trading partners.

Japan's blue-chip Nikkei slid almost 8%, European shares were down 6%, U.S. Treasury yields fell and the VIX stocks volatility gauge jumped to its highest since August.

President Trump on Monday wrote on Truth Social, his social media platform, "Be Strong, Courageous, and Patient, and GREATNESS will be the result!"

Trump accused other countries of "taking advantage of the Good OL' USA!" on international trade and said, "Our past 'leaders' are to blame for allowing this."

The Republican president has insisted his tariffs are necessary to rebalance global trade and rebuild domestic manufacturing. He has singled out China as "the biggest abuser of them all" and criticized Beijing for increasing its tariffs in retaliation.

Comments

"The reason markets have gone down so much is because of the increased uncertainty and the increased risk that the Trump tariffs could push the U.S. economy and the global economy into a big recession. The odds of a recession have increased."

"Fear and uncertainty have increased. People can say that this is good in the long run and that may be. But in the short run, there's a lot of pain."

"What is the end game? Is China going to capitulate? Is Europe going to capitulate or is Trump going to capitulate? At this point, it's not yet clear anybody is willing to back off."

"Some people are saying that maybe because of the decline in markets, the Fed will start cutting rates. But the problem there is that inflation is still elevated and the tariffs could lead to higher inflation. The Fed is between a rock and a hard place so they may not quickly come to the rescue of markets."

"Fed funds futures suggest we'll have five rate cuts. But when will the first rate cut going to be? It's not clear we're going to get rate cuts tomorrow. We're not likely to get a signal from the Fed that they are willing to cut rates." — John Praveen, managing director and Co-CIO at Paleo Leon in Princeton, NJ.

"Wall Street is bracing for more trade war impacts and a likely US recession, while Main Street forsees inflation driving higher food, gas and other living expenses. So both traders and consumers are quite near panic mode."

"The S&P went in a short time from record highs to bear market territory, and what we're seeing among investors is the uncertainty of U.S. trade policy and federal interest rate policy, and that anxiety among investors is weighing very heavily on these markets."

"The Fed has long been looking to attain that soft landing to avoid a U.S. recession. And with a U.S. recession now becoming increasingly likely, the greater prospects for a fed rate cut, which could thwart a major recession would certainly spark heightened investor enthusiasm." — Greg Bassuk, CEO at Axs Investments in New York.

"Before the inauguration of the current U.S. president, the world was kind of predictable. We knew that we were coming out of COVID-19. We knew that interest rates were on the way down. You can therefore make plans given that the world is rules-based. You can plan for a world where there is predictability.

"Since the changes seen coming in with Donald Trump, you've seen a lot of new rules and practices coming in, which has upended fundamental assumptions about how we thought the world worked for the last 80 years. So, if your fundamental assumptions on making an investment have changed, then what do you do? If you're going to make an investment, you're going to have to commit money to the investment. If your time frame for return on investment is very short (for instance you need a quick result), I would suggest that the current global uncertainty, which impacts costs, tariffs, realignment of global relationships, government rules, etc., means you hold back (delay) or you don't make the investment (abandon)." — Mah Kah Loon, senior advisor at Ernst and Young Corporate Finance in Singapore.

"We're in the territory where this will be a named event when people write about things in 10 or 20 years time. The easy driver is what was announced last week and the scale of it being far worse, but there are a couple of things that are exacerbating it."

"Firstly things become reflexive — derisking leads to derisking because you have volatility triggers that are hit. And even though individual actors in markets think they are doing the rational thing, when they all do the same thing at the same time, it becomes a bit irrational on the surface, a sort of tragedy of the commons."

"And secondly there is an intransigence element that will come to the fore because these guys (U.S. policymakers) don't sound like they are going to change their minds." — Tim Graf, head of Emea Macro Strategy in London.

"The euro has certainly performed really quite well over the last couple of days since we've heard about the tariffs. And that perhaps is exceptional. Maybe that's related to the Eurozone current account position, or maybe it's just related to investors still moving out of U.S. assets and still not quite sure where they should be moving their money to.... But at least normality has continued in so far as most currencies now are behaving the way you would expect them to behave, with the Aussie and New Zealand dollars selling off, and the Swiss franc and the yen gaining ground." — Jane Foley, head of FX Strategy in London.

Contributing: Associated Press

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