Stocks Slide as Economic Angst Hits Wall Street

US stocks plummeted on Thursday wiping out half of Wednesday's historic gains, amid uncertainty over Trump's tariff initiatives and an escalating trade spat with China. 30-year Treasury yields spiked higher, oil tumbled and the dollar fell versus major peers. Bloomberg's Michael McKee reports.

Economic angst enveloped every corner of Wall Street as US-China trade tensions escalate, sparking a slide in stocks, the dollar and oil, with liquidations in US assets pointing to disorder in the financial system.

A day after the biggest stock-buying wave in years, assets tied to the economic cycle are sinking again, with President Donald Trump’s mollifying message on trade talks providing little relief. Investors are rushing to game out how the effective freezing of Chinese trade will impact companies and growth. The S&P 500 fell about 3%. The dollar headed toward its lowest since October. A solid US sale of 30-year Treasuries failed to ignite a rally, but signaled appetite for bonds amid intense volatility.

Market euphoria flipped back to unease despite Trump’s signals that he’s close to a first deal on tariffs — without naming the country. Concern grew that an escalation of the trade war between the two biggest economies will bring lasting damage to global growth after the White House said US tariffs on China rose to 145%.

“Investors are sobering up and realizing that the US-China ‘food fight’ will probably get worse before it gets better,” said Michael Bailey at FBB Capital Partners. “We’re waking up to the fact that a 10% base tariff will sting, 90 days could fly by and then the pain of higher tariffs could return, and China is fighting back hard.”

Just a day after financial markets cheered Trump’s decision to delay some of his tariff plans, the selloff in riskier corners of the market suggests growing skepticism that trade talks will be wrapped up in a timely manner, despite White House National Economic Council Director Kevin Hassett saying the US is “well advanced” in its discussions with economic partners.

The first signs of a slowdown in global trade are already emerging as companies around the world hit their own pause button on orders and he continues to escalate his trade war with China. If anything, Trump is extending the uncertainty that has already begun to drag on business and consumer sentiment.

“We still believe the anxiety around tariffs are alive and well. Volatility works in both directions — down and up. The path forward likely includes more market swings as we do not have a conclusion. In fact, we have the opposite, a likely extension of the tariff negotiation process,” said Nathan Thooft at Manulife Investment Management.

The staggering US tariffs on China have triggered a tit-for-tat trade war that has unnerved global financial markets.

“The Trump administration’s stance has evolved from an all-out trade war against everyone, to a concentrated trade war against China,” said Nicolas Oudin of Gavekal Research. “Most investors believe that China shot itself in the foot by retaliating. The view from Beijing is different. Many in China read the ‘Trump fold’ as a sign of US weakness, and therefore as a validation of China’s decision to escalate.”

Bridgewater Associates’ billionaire founder Ray Dalio said investors have been left with “an element of trauma or shock or fear” after all the global markets turmoil this week.

“It dramatically affected psychology and attitude about the United States’ reliability,” he said in an interview with Bloomberg Television. “It could have been handled better.”

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