Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 8.Brendan McDermid/Reuters
The S&P 500 sold off sharply on Tuesday to close below 5,000 points for the first time in almost a year after it reversed a strong morning rally fueled by hopes - later dashed - that there might be some imminent U.S. delays or concessions on tariffs ahead of a midnight deadline. The TSX suffered a similar reversal, ending at its lowest level in eight months.
The benchmark S&P 500 index, which fell 1.6% on Tuesday, has lost several trillions of dollars in market value since President Donald Trump unveiled hefty global tariffs against U.S. trading partners late on Wednesday. Since markets opened Thursday, it’s down more than 12%, its biggest four-day percentage decline since the pandemic, according to LSEG data.
The S&P had risen more than 4% earlier on Tuesday as investors had hoped that Trump would soften his stance or postpone an April 9 deadline for tariffs.
But White House press secretary Karoline Leavitt said on Tuesday afternoon that Trump expects tariffs will go into effect even though she said nearly 70 countries reached out looking to begin negotiations to reduce the impact of U.S. trade policies.
Market participants “were optimistic this morning that we would get some sort of sign that we’re moving closer to a deal or a compromise with some of these bigger countries or that there would be a delay coming given that so many people wanted to negotiate,” said Lindsey Bell, chief market strategist at Clearnomics in New York. “That doesn’t seem to necessarily be the case as we are quickly approaching the midnight deadline and investors are losing confidence.”
The White House said on Tuesday afternoon that it expects 104% tariffs on China to go into effect on April 9.
This was after China had said earlier it will never accept the “blackmail nature” of Trump’s threat to ratchet up tariffs on Chinese imports to more than 100%.
United States Trade Representative Jamieson Greer said on Tuesday that exemptions to the global tariffs are not expected in the near term.
“People wanted to be optimistic and eventually realized they didn’t have a good reason,” Melissa Brown, Managing Director, Investment Decision Research at SimCorp. “Earnings are going to start to be reported in the next few days. Even if earnings in the first quarter aren’t down badly we’re going to see a lot of language from companies about the expected impact from the tariffs.”
Quarterly earnings season will kick off later this week, with JPMorgan, Morgan Stanley and Wells Fargo set to report on Friday.
The S&P 500 edged nearer to confirmation of a bear market, finishing almost 19% below its record close on Feb. 19. A bear would be 20% below.
The benchmark lost 79.48 points, or 1.57%, to close at 4,982.77 on Tuesday. The last time it closed below 5,000 was April 19 last year.
The Dow Jones Industrial Average fell 320.01 points, or 0.84%, to close at 37,645.59, while the Nasdaq Composite lost 335.35 points, or 2.15%, to end at 15,267.91.
After falling as low as 36.48 points earlier in the day, the CBOE Volatility Index - seen as Wall Street’s ‘fear gauge’ - gathered steam again to close at 52.33 points, which was its highest closing level since March 2020 in its fourth straight day of advances. Worries that the aggressive U.S. tariffs could spur inflation and hamper global growth have led to some to believe Federal Reserve interest-rate cuts could follow.
But San Francisco Federal Reserve Bank President Mary Daly said on Tuesday afternoon that with the economy strong and a lot still unclear on the effect of new policies of the Trump administration, the central bank should not rush to adjust interest rates.
In Canada, energy and consumer discretionary shares led broad-based declines. The S&P/TSX composite index ended down 352.56 points, or 1.5%, at 22,506.90, its fourth straight day of steep declines. It posted its lowest closing level since August 12.
The TSX energy sector fell 4.8% as the price of oil extended its recent declines, settling 1.1% lower at US$59.58 a barrel.
“The recession odds in the U.S. have spiked up since the (stock market) selloff,” said Elvis Picardo, a portfolio manager at Luft Financial, iA Private Wealth. “If the U.S. goes into a recession, it’s unlikely the rest of the world escapes that scenario and obviously you see energy demand fall on the back of that.”
CEOs of Canadian oil and gas producers have said they are seeking to avoid making abrupt decisions after the recent rout in oil prices.
All ten major sectors on the TSX lost ground, with consumer discretionary down 2.5% and industrials ending 1.4% lower.
Shares of Tilray Brands tumbled nearly 21% after the cannabis firm reported third-quarter revenue that fell short of analysts’ estimates. The health care sector, which includes Tilray Brands, was down 8.5%.
In individual U.S. stocks, health insurer UnitedHealth Group climbed 5.4% and Humana jumped 10.7% after the U.S. announced a 5.06% increase in payment rates to private insurers for 2026 Medicare Advantage health plans.
Declining issues outnumbered advancers by a 3.03-to-1 ratio on the NYSE where there were 17 new highs and 1132 new lows. On the Nasdaq, 1,002 stocks rose and 3,492 fell as declining issues outnumbered advancers by a 3.49-to-1 ratio. The S&P 500 posted no new 52-week highs and 109 new lows while the Nasdaq Composite recorded 17 new highs and 568 new lows.
On U.S. exchanges 23.45 billion shares changed hands, well above the 17.35 billion average for the last 20 sessions, but below Monday’s record 29.45 billion trades.
Asian stocks bounced back on April 8 following a day of wild swings on Wall Street.
Reuters
Reuters, Globe staff