A trader works on the floor of the New York Stock Exchange. Michael Nagle/Bloomberg/Getty Images
Wall Street’s brief moment of euphoria has come crashing back to Earth. US stocks set to tumble again, just one day after markets celebrated a historic rally fueled by President Donald Trump’s temporary suspension of his so-called “reciprocal” tariffs. But underneath the confetti, the economic wounds from his trade war remain wide open—and healing won’t come easy.
After surging nearly 3,000 points Wednesday, the Dow was projected to open more than 500 points lower Thursday morning—a drop of 1.3%. S&P 500 futures slid 1.7%, while Nasdaq futures fell nearly 2%. The celebration was short-lived.
Market Momentum Fades as Tariff Reality Sinks In
Trump’s 90-day pause on tariffs imposed on dozens of nations gave traders a glimmer of hope—but experts are saying the damage is already done. These “reciprocal tariffs,” which ranged from 11% to 50%, sparked global economic stress that won’t be reversed with a single pivot.
While the European Union mirrored the move by freezing its retaliatory tariffs and expressed interest in restarting negotiations, the optimism didn’t stick. Analysts, banks, and economists agree: this is not a full-scale reversal—it’s a temporary detour.
Treasury Secretary Scott Bessent claimed over 70 countries were lining up to negotiate deals with the U.S. But major players like China aren’t falling in line—and neither is the market.
Economic Fallout Looms: US stocks set to tumble again
Despite the brief pause, US stocks set to tumble again because key tariffs remain firmly in place. The sweeping 10% import tariff announced last week is still active, alongside 25% levies on auto imports, steel, aluminum, and select goods from Canada and Mexico. Trump has also vowed to push forward with new tariffs on pharmaceuticals, semiconductors, lumber, and copper.
Wall Street isn’t buying the optimism. Goldman Sachs warned that the chance of a U.S. recession is still a coin flip. JPMorgan was even more blunt, saying the risk remains at 60% and that Trump’s softening stance “changes little.”
“This isn’t a fix. It’s a Band-Aid on a broken bone,” said Joe Brusuelas, chief economist at RSM. “The shocks to the system are already in motion. We’re still on track for a recession.”
The China Clash Intensifies
As the U.S. economy teeters, the trade war with China is flaring up again. On Wednesday, Trump ratcheted tariffs on Chinese goods to 125%. In response, China enforced its own 84% retaliatory tariffs Thursday morning, signaling a clear refusal to back down.
A spokesperson for China’s Commerce Ministry made it plain: “The door to negotiation is open—but only based on equality and mutual respect. If the U.S. chooses confrontation, we will respond in kind.”
This is not posturing—it’s escalation. The markets know it.
Bonds, Oil, and Other Warning Lights
The bond market, often a more reliable predictor of economic stress than stocks, remains shaky. The 10-year Treasury yield spiked above 4.5% earlier this week before retreating slightly to 4.3%—still high enough to rattle nerves. Rising yields typically reflect falling bond prices, which signal investor uncertainty.
Analysts at ING put it plainly: “The pause is welcome, but not convincing. The market remembers.”
Crude oil is also flashing warning signs. U.S. oil prices fell again on Thursday to around $60 a barrel, barely rebounding from the sub-$ 57 drop on Wednesday. Brent crude, the global benchmark, slipped another 2.4% to hover near $63.
These aren’t just numbers—they’re signs of reduced demand and slowing global momentum.
Global Markets Breathe… For Now
While US stocks set to tumble again, global markets took a deep breath of relief. Asian indexes posted massive gains: Japan’s Nikkei 225 soared 9%, South Korea’s Kospi surged 6.6%, and Taiwan’s Taiex exploded 9.3%. Even the Hang Seng in Hong Kong added 2.1%, while Australia’s ASX 200 rose 4.5%.
Across the Atlantic, European markets rallied after EU Commission President Ursula von der Leyen praised the U.S. move as a positive step. “Stability is essential for trade. This is a move in the right direction,” she said.
Europe’s STOXX 600 climbed 5.5%, while France’s CAC, Germany’s DAX, and London’s FTSE all posted gains north of 5%.
Final Thoughts: Short-Term Sugar Rush, Long-Term Uncertainty
So here we are—one day up, the next down. It’s the new normal on Wall Street. The short-lived rally after Trump’s tariff pause was just that: short-lived. US stocks set to tumble again as the weight of unresolved trade tensions, fragile economic indicators, and looming recession risks sink back into investors’ consciousness.
The markets have a message for Washington: You can’t spin your way out of a downturn. You have to fix it.
