The S&P 500 and S&P/TSX Composite Index ended lower for a third straight session Monday after a heart-pounding day that saw wild swings in asset values, erroneous headlines, and some of the biggest names in finance voicing concerns about U.S. President Donald Trump’s sweeping tariffs. Trading volume broke U.S. records for the second session in a row.
All three U.S. indexes as well as the TSX started the day sharply lower, with the Dow plunging as many as 1,700 points. But in late morning trade, stocks violently turned higher, with the Dow surging to a gain of nearly 900 points. The S&P 500, meanwhile, went from a loss of 4.7% to a leap of 3.4%, which would have been its biggest jump in years.
The sudden rise followed a false rumour, picked up as headlines on wire services and CNBC, that Trump was considering a 90-day pause on his tariffs. A White House account on X quickly labeled it as “fake news” and markets almost instantly reversed the rally.
Shortly afterward, Trump dug in further and said he may raise tariffs more against China after the world’s second-largest economy retaliated last week with its own set of tariffs on U.S. products.
“The underlying problem of the market is that the administration’s approach to trade imbalances is to try a cure that’s worse than the disease,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
“It’s clear that investors favour either a pause or a different look at how to do this. It’s very telling that of the many Trump supporters in the investment and business community, it doesn’t look like there’s anybody stepping up and endorsing the administration’s approach to tariffs.”
Most of Wall Street biggest and influential investors had largely refrained from publicly commenting on Trump’s aggressive stance on tariffs. But following the swoon in stock values last week, that’s starting to change.
Hedge fund manager Bill Ackman of Pershing Square - a billionaire backer of Trump - on Monday called for a 90-day pause in the tariffs to negotiate with other countries, warning otherwise there could be “a self-induced, economic nuclear winter.”
BlackRock CEO Larry Fink said Monday that many business executives have told him the U.S. appears to already be in a recession, and that, in his mind, the tariffs “in the short run are very inflationary and destabilizing the economy.”
Others publicly criticizing the tariffs include Wall Street titans Stan Druckenmiller, Howard Marks, and Dan Loeb.
Meckler said the market’s wild swings on Monday left many active traders “a little bit concerned that if facts start to change, you could see a very rapid rise to this market.”
“It’s leading to this back-and-forth movement of rallies that are effectively being sold and drops in the market where people are covering shorts or trying to find a place to buy,” he said.
The Dow Jones Industrial Average fell 349.26 points, or 0.91%, to 37,965.60, the S&P 500 lost 11.83 points, or 0.23%, to 5,062.25 and the Nasdaq Composite gained 15.48 points, or 0.10%, to 15,603.26.
In the first two days following Trump’s tariff announcements last week, the benchmark S&P 500 index had dived 10.5% and lost about US$5 trillion in market value for its biggest two-day loss since March 2020.
On Friday, the blue-chip Dow confirmed it was in a correction, or more than 10% below its December record close while the Nasdaq confirmed it was in a bear market, defined as a decline of 20% or more below its record close.
In Monday morning trading, the S&P 500 had fallen 20% below its record closing high before recovering.
Canada’s S&P/TSX composite index ended down 334.01 points, or 1.4%, at 22,859.46, posting its lowest closing level since September 6.
The index has fallen 11.4% since posting a record closing high on January 30. That’s a magnitude that puts it in correction territory but a smaller pullback than for the S&P 500.
The energy sector was down 2% in Toronto as the price of oil extended its recent declines, settling 2.1% lower at US$60.70 a barrel, on worries that tariffs could push economies around the world into recession.
Heavily weighted financials also lost 2%, with Great-West Lifeco Inc down 5.1%.
Consumer staples ended 2.8% lower. Shares of Loblaw Companies Ltd declined 3.2%, extending their pullback from a record high on Thursday.
In the U.S. market, real estate lost 2.4%, the biggest percentage decliner among the S&P’s 11 major industry indexes on Monday. Communications services, was the biggest gainer, finishing up 1%. Technology, adding 0.3%, was the only other sector to advance.
In individual stocks, the S&P’s biggest drags were Apple Inc, down 3.7%, and Tesla Inc, which fell 2.6%. Its biggest boosts came from Nvidia, up more than 3%, and Amazon.com, which added 2.5%.
Several speeches by Federal Reserve officials and a series of economic indicators, including U.S. consumer price data, are expected this week, with investors keenly watching out for any signs of a recession.
On U.S. exchanges, 29.13 billion shares changed hands, far exceeding the 17.13 billion average for the last 20 sessions. Friday’s volume, of around 26.79 billion shares, beat the previous high of 24.48 billion shares traded on January 27, 2021.
Many global stock markets had a brutal session Monday, with stocks in Hong Kong plunging 13.2% for their worst day since 1997. Meanwhile, bitcoin sank below US$79,000, down from its record above $100,000 set in January, after holding steadier than other markets last week.
In the bond market, U.S. Treasury yields rallied to recover some of their sharp drops from earlier weeks. Some analysts said it could be due to investors outside of the United States wanting to pare their U.S. investments. The yield on the 10-year Treasury jumped to 4.20% from 4.01% late Friday. The yield on the Canadian 10-year bond Monday rose by a similar degree.
With reports from Reuters and The Associated Press