From Yahoo Finance: 2025-05-04 08:40:00

After shocking Wall Street with steeper tariffs, Trump’s policies caused a 12% drop in the S&P 500 and an 11% loss in the Dow Jones Industrial Average. However, the S&P 500 rallied 1.5% for a ninth straight gain, returning to pre-tariff levels. The index remains 7% below its all-time high.

Trump’s announcement of a “90-day PAUSE” in tariffs caused the S&P 500 to soar 9.5% in one of its best days ever. The market experienced a roller coaster as Trump negotiated tariffs with trading partners while easing tariffs on autos, smartphones, and electronics.

Market watchers were surprised by the severity of the stock market’s fall after Liberation Day. Tumbling bond prices raised concerns about the U.S. Treasury market’s status, causing the U.S. dollar to sink. Trump’s pause on tariffs came after bond investors showed signs of unease.

Despite declining consumer confidence due to trade policy uncertainty, hard data like employment numbers showed the economy was still stable. The Federal Reserve paused rate cuts to assess the impact of tariffs, with the market expecting 3 cuts before year-end.

U.S. companies have exceeded profit expectations, driving stock prices higher. Three-quarters of S&P 500 companies have beaten profit expectations, with heavyweights like Microsoft and Meta Platforms on track to deliver 13% growth from last year.

Amidst uncertainty, many companies are unsure if profit growth will last due to Trump’s tariffs. CEOs have lowered or withdrawn financial forecasts, with United Airlines offering two separate forecasts depending on a recession. Trump’s volatile tariff approach has created the most market volatility since the pandemic.

With Trump still committed to tariffs, market experts predict a similar reaction to the initial tariff plan if the pause expires without a new agreement. Financial markets remain on edge as the administration’s next move is awaited.



Read more at Yahoo Finance: How the stock market made back all its losses after Trump escalated the trade war