S&P 500 Plunges to 5,000 as Trump Remains Unwavering on Tariffs

Published: April 7, 2025 by Omor IE

Key Points

Several Asian exchanges hit circuit breakers as stocks plunged.
The U.S. stock market has fared better but remains extremely volatile.
The S&P plunged below 5,000 before recovering but declined again.
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Stocks plunged worldwide today, with several Asian exchanges hitting circuit breakers. The U.S. market has fared better at open, but not by a long shot. President Donald Trump spoke to reporters on Sunday on Air Force One and appeared unwavering on tariffs despite the deepening market turmoil. He compared tariffs to medicine.

U.S. Treasury Secretary Scott Bessent also said that the market selloff was a short-term phenomenon and that Wall Street was underestimating Donald Trump.

The selloff intensified during the market open today as many had previously believed tariffs to be a negotiating tactic. Now that they’ve gone into effect, the market is much more spooked after Trump’s comments that suggest tariffs are here to stay. The market did recover substantially after Trump posted on Truth Social that he spoke to the Japanese Prime Minister and that countries all over the world were talking to the administration.

White House economic advisor Kevin Hassett also said that Trump was considering a 90-day pause to tariffs, minus China.

Here’s a market update as of 10:30 A.M (ET) today.

The S&P 500 is down 72.37 points, or 1.43%.
The Nasdaq Composite is down 173.18 points, or 1.1%.
Dow Jones Industrial Average is down 452.06 points, or 1.18%.

More About Tariffs

Tariffs are the talk of the town and are overshadowing most other news today. The market still hopes severe tariffs will not stick around in the long run and come down after negotiations. The market’s reaction to Trump’s Truth Social post shows plenty of optimism despite the president saying otherwise. Again, Trump appearing unwavering on tariffs could be a negotiating tactic to show strength.

In the meantime, the market remains highly volatile. China filed a complaint with the World Trade Organization over tariffs and today accused the U.S. of “unilateralism, protectionism and economic bullying with tariffs.” Last week, China retaliated with its own tariffs and export restrictions on rare earths. The Hang Seng Index tumbled by 13.2% when Hong Kong markets closed today.

Germany’s economy minister called the premise of tariffs “nonsense.” The EU’s Trade Chief Sefcovic said he was ready to discuss this with the U.S. but has not seen any engagement that would lead to a mutually acceptable solution. However, he did say he was prepared to discuss zero-for-zero tariffs.

Tariff-related fears have also led Morgan Stanley to downgrade both large-cap and mid-cap banks in the U.S. to in-line from attractive.

Retail Investors Buying, Institutions Selling

Retail investors are buying the dip en masse and have done so at record levels not seen in over a decade. This is likely where the buying pressure is coming from, as many investors are rushing to buy the dip before tariff policies are potentially reversed. The stock market turned green momentarily as the sharp selloff caused indexes to become oversold for the time being, and rumors of a 90-day pause went around.

On the other hand, institutional investors have been much less bullish. Many big investors have even started pulling out of private equity.