Stocks tumble as markets fade Trump tariff U-turn rally

U.S. stocks extended their retreat into Thursday afternoon trading, while Treasury yields moved and the dollar resumed its recent slump, as global markets continued to react to the dramatic tariff U-turn unveiled yesterday by President Donald Trump.

Updated at 2:27 PM EDT

Gold roared back to a fresh record high in late-morning trading, with spot prices rising 2.72% to $3,171.49 per ounce, taking the bullion’s year-to-date advance to around 20%. Spot prices were last marked at around $3,164.50 per ounce.

The moves suggest investors are shunning the U.S. dollar as a safe-haven trade amid the ongoing tariff chaos, with the greenback no on track for its biggest one-day decline in 10 years against the Swiss franc and the dollar index at the lowest levels since late September.

Updated at 1:10 PM EDT

The Treasury sold $22 billion in new 30-year bonds in the last of three auctions this week that raised around $119 billion.

Demand for the paper ticked higher, with total bids topping $53.4 billion and the level of indirect bidders, comprised of mostly foreign central banks, rising by 1.5 percentage points from last month’s sale to 61.9%. Dealers held onto around 12.5% of the sale.

Benchmark 10-year note yields were last marked 2 basis points lower at 4.341%, a move that has helped stem some of the afternoon in stocks.

Updated at 12:32 PM EDT

Stocks are giving back a big chunk of yesterday’s historic rally, which saw the S&P 500 notch its biggest single-day advance since 2008, as the White House ratchets up new tariffs on China and bond markets continue to wobble in the face of slowing growth and rising inflation risks.

The S&P 500 was last marked 315  points, or 5.8% lower on the session, with the Dow falling more than 2,000 points. The Nasdaq slumped 1,153 points, or 6.74%. Some of the morning declines were accelerated by a report from CNBC that said the Trump administration had raised the effective tariff rate on China to 145%.

Benchmark 10-year yields were last marked at a session high of 4.361% while the U.S. dollar index slumped 1.85% to 101.003, the lowest since late September.

The VIX index, meanwhile, surged 43.3% to $49.16, suggesting daily swings for the S&P 500 of around 3.07%, or 160 points.

Updated at 10:51 AM EDT

Benchmark 10-year Treasury note yields are creeping higher in early trading, even with the cooler-than-expected reading of March CPI inflation, as the bond market turmoil that likely triggered the President’s tariff reversal continues to rattle investors.

The paper was last marked at 4.321%, around 5 basis points higher than overnight levels but still around 10 basis points south from yesterday’s benchmark auction and tariff pause announcement.

The Merrill Lynch Option Volatility Estimate, or MOVE index, a key gauge of bond market volatility, remains pinned near the highest levels in six months and a $22 billion auction of 30-year bonds, whose yields past the 5% level for the first time since November of 2023 last year, looms later this afternoon.

“U.S. Treasuries remain a cornerstone of global bond markets, their traditional notion as a completely risk-free investment may need to be revisited in light of several contemporary factors, and the international rating agencies — Standard & Poors, Moody’s and Fitch Ratings — are very likely to downgrade further U.S. outlooks and even possibly scorings in response to the elevating risks arising from the tariff wars and their possible consequences,” said John Murillo, chief dealing officer at London-based B2Broker.

Related: Did Treasury bond markets cause Trump tariff blink?

Updated at 9:33 AM EDT

The S&P 500 was marked 113 points, or 2.07% lower in the opening minutes of trading, with the Nasdaq down 462 points, or 2.7%.

The Dow fell 665 points while the Russell 2000 slumped 49 points, or 2.57% following the softer-than-expected March CPI inflation report.

“Yesterday’s pause doesn’t mean tariffs are no longer driving the economic narrative,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

“Today’s cooler-than-expected inflation should be taken as old news, with tariffs expected to send inflation rocketing higher in the next couple of months,” she added. “The Fed remains in a tough spot, caught between a trade war causing tight financial conditions and weight on the economy as inflation takes off.”

Updated at 8:45 AM EDT

U.S. consumer inflation eased notably last month in what could be a outlier in terms of price pressures heading into the start of sweeping tariffs on goods imported from America’s biggest trading partners.

Headline CPI for the month of March was pegged by the Commerce Department at an annual rate of 2.4%, down from the 2.5% pace recorded in February and inside Wall Street’s 2.5% forecast.

Core inflation, which strips out volatile components like food and energy, slowed to an annual rate of 2.8%, besting Wall Street’s 3% forecast and February’s 3.1% pace.

Stocks were little-changed following the data release, with futures contracts tied to the S&P 500 indicating an opening bell decline of around 85 points, with the Dow called 470 points lower and the Nasdaq priced for a 445 point pullback from last night’s surge.

Benchmark 10-year Treasury note yields were steady at 4.312% following the data release, while 2-year notes were pegged at 3.825%.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 1.3% lower at 101.549.

Stock Market Today

The President’s decision to issue a 90-day pause on his sweeping reciprocal tariffs, while boosting levies on China-made goods to an eye-watering 125%, launched the biggest single-day gain for U.S. stocks since 2008, but left many investors reeling amid the rapid and unpredictable policy changes coming from the White House.

President Trump will leave a baseline 10% tariff on all trading partners in place, apart from Canada and Mexico, which will be hit with the 20% levies he unveiled in February and then delayed a few days later.

Sector-specific levies on autos remain in place, as well as those on steel and aluminum, with Trump vowing to impose similar duties on pharmaceutical imports.

China’s 125% tariff, meanwhile, and Beijing’s retaliatory 84% duty on American imports, will effectively shut down trade between the world’s two biggest economies, with the broader tariff regime likely to slow domestic growth and stoke inflation pressures.

Markets are also still left nursing trillions in equity and bond losses, as well, as the S&P 500 remains 3.8% lower than its April 2 ‘Liberation Day’ close and is down more than 7% for the year.

Investors are also looking at another potential retaliation from China, which has allowed the yuan to drift to the lowest levels since 2007 against the U.S. dollar and could potentially devalue the currency in order to support its broader export economy.

“Despite the rally, many analysts caution against reading too much into the bounce. Historical precedent – from the dot-com bubble burst to the 2008 financial crisis – shows that sharp gains often occur within broader downturns,” said Kate Leaman, chief market analyst at AvaTrade. “This raises the possibility that Wednesday’s surge may be a classic ‘dead cat bounce’ rather than the start of a sustained recovery.”

Market volatility levels remain elevated, and while the CBOE Group’s VIX index is down 28% from this week’s five-year peak, at $37.51 it’s still suggesting daily swings for around 2.35%, or 125 points, for the S&P 500.

Related: Bond markets whipsaw amid ‘sell America’ trade in safe-haven Treasuries

Futures contracts tied to the benchmark suggest and opening bell pullback of around 108 points, with the Dow Jones Industrial Average called 615 points lower following last night’s staggering gain of 2,962.9 points.

The tech-focused Nasdaq, which also had its best day since 2008 with a gain of just over 12.1%, is called 415 points lower.

In the bond market, which may have shaken the President more than the selloff in equities prior to his tariff retreat, benchmark 10-year Treasury yields were holding at 4.277%, around 15 basis points south of yesterday’s better-than-expected auction of $39 billion in re-opened notes.

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In overseas markets, Europe’s Stoxx 600 soared 4.96% in mid-day Frankfurt trading, while Britain’s FTSE 100 powered 3.9% higher in London.

Overnight in Asia, Japan’s Nikkei 225 surged 9.1%, following its second-largest point gain on record, as trade advisors head to Washington to hammer out a tailored trade deal.

The regional MSCI ex-Japan benchmark rose 4.36% higher into the close of trading, with bets on new stimulus from Beijing lifting China’s CSI 300 and Shenzen Composite indices.