Wall Street Struggles, Dollar Falls as Trade War Escalates Again

11 Apr at 12:20 pm

2912 posts

Wall Street Struggles, Dollar Falls as Trade War Escalates Again/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks fluctuated Friday as escalating trade tensions between Washington and Beijing unsettled investors. The S&P 500 dipped while gold prices surged, Treasury yields climbed, and the dollar weakened. A sharp decline in consumer confidence and rising inflation expectations added to Wall Street’s unease.

People walk by the New York Stock Exchange, Thursday morning, April 10, 2025. (AP Photo/Richard Drew)

Wall Street Volatility: Quick Looks

S&P 500 fell 0.1%, Nasdaq dropped 0.1%, and Dow lost 80 points by mid-morning.
China raised tariffs on U.S. goods to 125%, retaliating against Trump’s 145% tariffs.
Gold prices jumped 2%, while U.S. dollar fell against major currencies.
Treasury yields surged: 10-year note up to 4.54% from 4.40% Thursday.
University of Michigan consumer sentiment index plunged to 50.8, worst since the pandemic.
Consumers now expect 6.7% inflation in the next year — highest since 1981.
Investors pulled away from traditional “safe haven” assets like U.S. bonds.
JPMorgan, Morgan Stanley, Wells Fargo posted strong earnings but couldn’t lift markets.
Analysts warn that inflation and rate policy uncertainty may cap future rallies.

Wall Street Struggles, Dollar Falls as Trade War Escalates Again

Deep Look

NEW YORK — U.S. financial markets experienced fresh turbulence Friday as President Donald Trump’s deepening trade war with China and surging inflation expectations rattled Wall Street and raised the specter of a global economic slowdown.

The S&P 500 edged down 0.1%, while the Dow Jones Industrial Average dropped 80 points, or 0.2%, and the Nasdaq slipped 0.1% by late morning. Markets veered between gains and losses throughout the session, reflecting heightened investor anxiety as Trump’s aggressive tariff stance reignited fears of economic fallout.

“We remain in the early innings of this global trade regime change,” said Darrell Cronk of Wells Fargo Investment Institute. “The 90-day tariff pause offers little clarity — only prolonged uncertainty.”

China Strikes Back

Beijing on Friday hiked tariffs on U.S. imports to 125%, responding to Trump’s 145% duties on Chinese goods. A spokesman for China’s Finance Ministry dismissed the U.S. actions as “a numbers game” and vowed to “fight to the end” if provoked further.

Even as Trump eased tariffs for other nations earlier this week, the focus on isolating China appears to be heightening geopolitical and economic tensions — not easing them.

“This tit-for-tat escalation is turning into a dangerous spiral,” said economist Rachel Riley of MarketEdge Research. “We’re seeing confidence fall across every sector.”

Consumer Confidence Tanks

Reinforcing fears of a slowdown, a University of Michigan survey showed consumer sentiment plummeted 11% in April, reaching its lowest level since the height of the COVID-19 crisis. Alarmingly, the drop was consistent across all demographics — income, age, education, and geography.

Even more concerning: Consumers now expect inflation to reach 6.7% over the next year, up sharply from 5.0% just a month ago. That’s the highest inflation expectation since 1981, threatening a feedback loop that could make prices rise even faster.

Markets React With Volatility

In response to the escalating trade war and economic gloom, investors flocked to gold, traditionally a safe haven, sending its price up more than 2%.

However, U.S. government bonds, another typical safe asset, didn’t benefit. Instead, Treasury prices fell, and the 10-year yield jumped to 4.54%, up sharply from 4.40% Thursday and 4.01% a week ago.

“It’s highly unusual to see both equities and Treasurys selling off simultaneously,” said bond strategist Lena Torres. “This signals deeper stress in the system — and possibly waning confidence in U.S. debt.”

Possible explanations include:

Foreign investors selling Treasurys amid trade tension
Hedge funds liquidating assets to raise cash
Concerns over U.S. fiscal policy and debt reliability

Earnings Season Begins

Despite the turmoil, major banks delivered a strong start to earnings season:

JPMorgan Chase beat estimates and rose 2.3%
Morgan Stanley also topped forecasts but dipped 1.6%
Wells Fargo surprised on profits but fell 3.7%

The results suggest underlying economic resilience, though it may not be enough to offset growing macroeconomic concerns.

Inflation Adds to the Fed’s Dilemma

A separate report from the Labor Department showed that wholesale inflation fell last month, a positive sign. But analysts were quick to note the data only reflects March, and future months could see higher prices due to tariff effects.

That complicates matters for the Federal Reserve, which may have been hoping to cut interest rates to stimulate the economy. With inflation expectations now soaring, the Fed could find itself trapped — unable to ease policy without risking even faster inflation.