Dow Bounces Back Big: S&P 500 Reverses Steep Losses in Wild Market Swing

New Delhi: The global financial markets are facing mounting losses, with investors increasingly worried about the economic fallout from President Donald Trump ’s ongoing trade war. As of Monday morning, the S&P 500 dropped 3.8% in early trading, marking the index’s worst week since the onset of the COVID-19 pandemic in March 2020. 

The S&P 500, a key benchmark for investor portfolios including many 401(k) accounts, has shed more than 20% of its value since hitting a record high just two months ago.

Bear Market Looms on the Horizon

If the S&P 500 finishes the day in negative territory, it would officially enter a “bear market,” a term used to describe a prolonged period of decline in the stock market, typically a drop of more than 20%. 

The Dow Jones Industrial Average also saw a dramatic drop, down 1,343 points, or 3.5%, by 9:35 a.m. Eastern time. 

Meanwhile, the Nasdaq composite index plunged 4.2%, reflecting the widespread market turmoil.

Global Markets Feel the Pain

The financial distress was not confined to the US markets. In Hong Kong, stocks experienced their worst day since 1997, plummeting by 13.2%. 

Additionally, US crude oil prices briefly fell below $60 a barrel for the first time since 2021, driven by concerns that weakened global demand, partly due to trade barriers, will reduce consumption of oil. 

Bitcoin, once considered a safer bet in times of market volatility, also took a hit, dropping below $78,000, down from a January peak of over $100,000.

Trump’s Reactions Fuel Investor Unease

The sharp market declines have sparked concern on Wall Street, not just due to the immediate losses but because they suggest that Trump is unlikely to adjust his policies despite the financial pain. 

While aboard Air Force One on Sunday, Trump acknowledged the pain in the markets but indicated that he wasn’t overly concerned, stating, “sometimes you have to take medicine to fix something.” 

This response has done little to alleviate investor fears.

Possibility of Lower Tariffs Offers Some Hope

Despite the negative outlook, some investors are clinging to hope that Trump may consider reducing tariffs following negotiations with other countries. 

Trump himself mentioned that he has received interest from foreign leaders eager to strike deals.

The Role of Tariffs in Economic Slowdown

Trump has consistently justified the tariffs, arguing that they are necessary to bring manufacturing jobs back to the United States. However, experts warn that this process could take years to fully unfold.