US stocks enter bear market territory as tariff misery continues on Wall Street
Originally Published: 07 APR 25 08:19 ET
Updated: 07 APR 25 09:37 ET
By David Goldman, CNN
New York (CNN) — US stocks opened lower Monday as markets around the world tumbled over concerns about how President Donald Trump’s sweeping tariffs might upend the global economy and stymie US economic growth.
Markets opened in bear market territory – a decline of 20% from a recent peak – after a historic rout in Asia and massive losses in Europe.
The Dow fell 1,200 points, or 3.2%. The broader S&P 500 was 3.4% lower and opened in bear territory. The Nasdaq Composite slid 3.96%. The S&P 500 hit a record high less than seven weeks ago, on February 19. If the index closes in bear market territory, that would be the second-fastest peak-to-bear market shift in history (the fastest occurred during the 2020 pandemic).
Wall Street is coming off a rout in US stocks Thursday and Friday that saw the Nasdaq confirm it was in a bear market. Investors may be sensing a buying opportunity. With all the recent and rapid selling, stocks are getting cheap: They’re trading at a historically inexpensive 15 times future earnings projections. That could help markets rebound if investors believe stocks are oversold.
“We are getting close to a bottom,” said James Demmert, chief investment officer at Main Street Research. “The fact that stocks have dropped so significantly in these deep intraday moves is a clear sign of indiscriminate and fear-based selling. When this happens, we tend to soon see significant rallies.”
That could muddy the message Wall Street has been trying to send to President Donald Trump. Market mayhem has potentially opened the door to some negotiation.
Trump said Sunday on Air Force One that he has been fielding calls from tech executives and world leaders over the weekend on tariffs. Trump said he would be open to a deal with China and the European Union, although he demanded they close the trade gap with the United States. It’s a feat that isn’t solvable overnight, if ever.
“If they want to talk about that, I’m open to talking,” Trump said.
If the stock market pulls back from its extensive declines, Trump may get the message that he can hold firm and weather the market storm, some market analysts said.
”We need this market to crash — to keep the pressure on the administration,” Ed Yardeni, president of Yardeni Research told CNN in a stunning comment from a prominent market analyst.
To be sure, markets are still lower. Yardeni noted to clients earlier in the day that “Liberation Day” has been followed by Annihilation Days in the stock market.
Wall Street’s fear gauge, the Cboe Volatility Index, or VIX, has surged to levels not seen since the Covid-19 pandemic as investors fret over the market’s next move. CNN’s Fear and Greed Index has slumped to its lowest levels this year.
Trump, for his part, has tried to make the case that recession fears could be a good thing. For example, US oil prices plunged below $60 for the first time since April 2021 on fears that global demand will be sapped in an economic downturn. And Treasury yields have fallen as investors have poured money into the apparent safety of government bonds. That could lower some consumer rates pegged to Treasury yields, including mortgages, credit cards and auto loans – although Federal Reserve Chair Jerome Powell said Friday the central bank was in no rush to lower rates.
“Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION, and the long time abused USA is bringing in Billions of Dollars a week from the abusing countries on Tariffs that are already in place,” Trump said in a Truth Social post Monday morning.
Major uncertainty
Trump and his tariffs have taken a bull stock market and are on the precipice of turning it into a bear faster than any president has overseen in modern history. If the stock market closes in bear territory, it would be the earliest in a new administration a bull market has turned into a bear in the history of the S&P 500, which dates back to 1957.
Among the reasons for the bearish sentiment is the uncertainty the Trump administration has created regarding its inconsistent messaging about whether tariffs would be open to negotiation.
On Wednesday, America will impose significantly higher “reciprocal” tariffs on dozens of countries that have the highest trade imbalances with the United States. In a note to investors Sunday, Goldman Sachs said that if Trump followed through with those threats, it would surely plunge the US and global economies into a recession. JPMorgan CEO Jamie Dimon said in an annual letter to shareholders Monday that Trump’s tariffs would raise prices and slow economic growth.
In addition to baseline 10% universal tariffs that went into effect Saturday morning, Trump has also put in place tariffs on autos, steel and aluminum. He placed 25% tariffs on certain goods from Canada and Mexico. And more tariffs could be on their way: Tariffs on auto parts are set to go into effect no later than May 3. Meanwhile Trump has also threatened tariffs on lumber, pharmaceuticals, copper and microchips, among other products.
Whether or not Trump follows through with those threats could be the determining factor in whether the economy plunges into a global downturn.
If you ask Commerce Secretary Howard Lutnick, Trump isn’t bluffing.
“The tariffs are coming. (Trump) announced it, and he wasn’t kidding,” Lutnick told CBS’s “Face the Nation” on Sunday. “The tariffs are coming. Of course they are.”
This is a developing story and will be updated.
The-CNN-Wire
™ & © 2025 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
