U.S. stocks see volatile trading after new Chinese tariffs on U.S. goods
Investing.com-- U.S. stocks traded in a volatile fashion Wednesday, after China announced more reciprocal tariffs on U.S. goods, intensifying the trade war between the two largest economies in the world, and heightening fears of a global recession.
At 07:40 ET (11:40 GMT), the Dow Jones Industrial Average dropped 230 points, or 0.6%, while the S&P 500 index traded largely unchanged and the NASDAQ Composite gained 75 points, or 0.5%.
Over the course of the last four days, the Dow has lost more than 4,500 points, over 10%, while the S&P 500 has sustained a 12% loss. The Nasdaq Composite is down more than 13% in that period.
China retaliates to Trumpโs new duty
China announced earlier Wednesday that it will impose 84% tariffs on U.S. goods from Thursday, up from the 34% previously announced.
This followed U.S. President Donald Trump introducing a new 50% hike on Chinese imports late Tuesday, marking a dramatic escalation in global trade tensions, and resulting in a 104% cumulative tariff on Chinese imports.
Chinaโs foreign ministry had said earlier Wednesday that Beijing will take โresolute and forcefulโ measures to protect its own interests.
Other notable tariffs included a 20% duty on the European Union, 24% on Japan, 46% on Vietnam, 25% on South Korea, and 32% on Taiwan.
The tariffs are part of a broader U.S. trade strategy that imposes steep levies on countries deemed to have unfair trade advantages.
The policy shift has rattled global markets, sparked retaliatory tariffs from key U.S. trade partners, and raised fears of a broader economic downturn.
Global recession risks not priced in - Goldman
Yet despite these hefty losses, Goldman Sachs analysts said the global recession risks were still not fully priced in by markets, signaling further declines ahead.
"Among common recession gauges, only the VIX is at levels associated with past recession peaks: longer-dated equity volatility, credit spreads and the yield curve are not," Goldman Sachs analysts said in a note.
"We think there is a high chance that we continue to push toward full recession pricing, which would imply weaker equities, wider credit spreads, a deeper Fed cutting cycle and higher longer-dated equity volatility," they added.
Analysts said that the most direct path to recovery would be a significant reversal in trade policy, as current pricing and macro signals do not yet offer a floor against downside risks.
Fed minutes due
Aside from the tariff rollout, investors will keep an eye on the Federal Reserveโs meeting minutes, due later in the session.
San Francisco Federal Reserve Bank President Mary Daly on Tuesday became the latest U.S. central banker to say thereโs no rush to cut interest rates despite the uncertainty surrounding the size and scope of Trumpโs tariffs.
However, speculation is growing that the Federal Reserve will start cutting its policy rate as soon as next month, to compensate for slowing growth as the tariffs bite.
There is now a 56% chance of a Fed interest-rate cut in May, up from about 40% earlier in the day, based on the prices of short-term U.S. interest-rate futures traded at CME Group (NASDAQ:CME).
Delta doesnโt reaffirm FY guidance
In the corporate sector, Delta Air Lines (NYSE:DAL) stock rose over 5% despite the carrier saying earlier Wednesday that it will not reaffirm its full-year financial guidance, citing uncertainty around the trajectory of U.S. President Donald Trumpโs tariff plans.
"Given the lack of economic clarity, it is premature at this time to provide an updated full-year outlook," the carrier said in a statement on Wednesday. Delta noted that it will provide a financial update later in the year "as visibility improves."
Walmart (NYSE:WMT) followed suit, with the retail giant pulling its outlook for operating income in the first quarter, citing uncertainty about the potential impact of sweeping tariffs on China, Vietnam and other key sources of goods across the globe.
Constellation Brands (NYSE:STZ), the owner of beers like Modelo and Pacifico, will release its results after the U.S. close.
Crude falls to four-year lows
Oil prices slumped Wednesday, dropping to their lowest levels in more than four years as the trade war between China and the U.S., the worldโs two biggest economies, intensified.
At 09:35 ET, Brent futures dropped 4% to $60.30 a barrel, and U.S. West Texas Intermediate crude futures fell 4% to $57.15 a barrel.
Oil has lost about one-fifth of its value since Trump announced higher tariffs on its trading partners on April 2, the biggest five-day drop since March 2022.
(Ayushman Ojha contributed to this article.)
