By Caroline Valetkevitch, Reuters
US President Donald Trump holding a chart titled 'Reciprocal Tariffs' during an event at the White House in Washington, DC, on 2 April 2025. Photo: AFP / Brendan Smialowski
Major stock indexes and the US dollar dropped on Thursday, with the S&P 500 ending down more than 3 percent as investors remained skittish, a day after US President Donald Trump's move to temporarily lower tariffs on many countries caused a massive relief rally.
Investors fled to safe havens, with gold prices jumping nearly 3 percent to an all-time high and the dollar hitting a 10-year low against the Swiss franc.
Most US Treasury prices were slightly higher, with another strong bond auction on Thursday, helping to ease demand concerns amid the tariff-related market volatility.
Treasuries had sold off sharply earlier this week.
Much uncertainty remains on the tariff front and about the trade war's potential economic fallout.
Trump on Wednesday also said he would raise the tariff on Chinese imports, and the White House said a 10 percent blanket duty on almost all US imports will remain in effect.
US tariffs on China now total 145 percent after the latest hike, the White House told CNBC on Thursday.
"The realisation is that while we got some good news yesterday, we still have to live in a world where there's new uncertainty," chief market strategist at B Riley Wealth in New York Art Hogan said.
The stock declines came despite US data showing consumer prices unexpectedly fell in March.
Amid the head-spinning changes in the market and news on tariffs, investors are also gearing up for the start of quarterly US earnings, with results from some of the biggest US banks including JPMorgan Chase due on Friday.
"There will still be a lot of pulled guidance," chief executive officer of Longbow Asset Management in Tulsa Jake Dollarhide said.
"It may be that the market is taking back some of yesterday's rip-your-face-off rally because they realise some of the relief is not as great as they thought."
Markets have been roiled since Trump's announcement of sweeping tariffs late on April 2.
Following the whipsaw of Wednesday's bounce and Thursday's selloff, the S&P 500 remained 7.1 percent below where it was just before the reciprocal tariffs were announced last week.
The Dow Jones Industrial Average fell 1,014.79 points, or 2.50 percent, to 39,593.66, the S&P 500 fell 188.85 points, or 3.46 percent, to 5,268.05 and the Nasdaq Composite fell 737.66 points, or 4.31 percent, to 16,387.31.
MSCI's gauge of stocks across the globe fell 6.01 points, or 0.77 percent, to 779.27.
Trump's reversal on tariffs on Wednesday had also pushed overseas equities higher.
The pan-European STOXX 600 index ended up 3.7 percent, and stocks in Asia also finished sharply higher.
In response to Trump's 90-day tariff pause, the European Union will delay retaliatory levies on American goods as countries within the bloc scramble to reach trade deals with Washington, European Commission chief Ursula von der Leyen said.
The dollar fell against major peers.
Against the Swiss franc, the dollar weakened 3.89 percent to 0.825. The euro was up 2.23 percent. Against the Japanese yen, the dollar weakened 2.07 percent to 144.66.
The US Treasury Department saw good demand for a sale of 30-year bonds on Thursday after a strong 10-year note sale the day before, easing concerns that buyers would shut the debt.
Analysts attributed rapid yield increases this week to large liquidations as hedge funds and other asset managers unwound trades and sold assets due to margin calls and losses.
Concerns had also increased that a large holder of Treasuries, such as China, may be unloading some of its portfolio as a trade war between the world's top two economies intensifies.
The 10-year note yield was last down 1 basis point on the day at 4.386 percent, while the interest-rate sensitive two-year yield fell 11 basis points to 3.843 percent. Yields move opposite to prices.
Oil prices fell, erasing the previous session's rally, with US crude declining $2.28 to settle at $60.07 a barrel and Brent crude easing $2.15 to end at $63.33.
Spot gold was up 2.6 percent at $3,160.82 an ounce, after hitting a record high of $3,171.49 earlier in the session.
- Reuters
