US stocks experienced a volatile trading session on Monday, resulting in a significant drop.
This occurred as the White House maintained a defiant stance following the implementation of unexpectedly high tariff rates on major US trading partners, which triggered a market meltdown.
Additionally, US President Donald Trump threatened to impose additional tariffs on China as the trade war between the two countries became more intense.
Investors were briefly relieved earlier today by a false report suggesting a potential delay in US tariffs.
However, the White House promptly denied the report, causing markets to fall back into decline. Global markets have been turbulent since April 2, when the new US duties were announced.
At the time of writing, the Dow Jones Industrial Average was down 2.3% or nearly 900 points.
The benchmark had slid more than 1,000 points earlier in the day. The S&P 500 index slumped 1.6%, while the Nasdaq Composite was down 0.7% on Monday.
The sell-off was a continuation of the decline that began after the close last Wednesday.
“Investors have been in panic mode ever since. Recession fears have increased, while expectations of sharp rate cuts from the Federal Reserve and other central banks have soared,” said David Morrison, senior market analyst at Trade Nation.
The market is currently pricing in a 25 basis point rate cut by the Fed at its upcoming meeting next month.
Additionally, the CME’s FeedWatch Tool suggests that the Fed Funds rate will decrease to a range of 3.00-3.25% by the end of the year.
Traders were looking to ‘buy the dip’, as the S&P 500 and NASDAQ had already pulled back from their respective record highs hit in mid-February.
Morrison said:
But anyone expecting clarity after Wednesday’s announcement was left disappointed. The tariffs were far more aggressive than anticipated, and it’s become painfully apparent that Trump is completely indifferent to a collapsing stock market.
Restaurant stocks fall
Restaurant stocks fell in morning trading due to investor concerns over weaker consumer spending and a potential recession.
Shares of restaurant companies, including McDonald’s, Chipotle, Darden Restaurants, and Starbucks, fell as the markets reacted to the Trump administration’s tariffs.
Industry analysts predict that the new tariffs won’t significantly impact restaurants directly.
However, they do anticipate that higher prices on other goods will decrease consumer spending and overall confidence.
For instance, Starbucks may experience slightly higher costs for coffee beans, but the bigger concern is potentially lower demand for their drinks, especially as their US business is already working to increase customer traffic.
Shares of McDonald’s dropped over 1%, while Chipotle slumped 4%. Starbucks’ stock plunged more than 5% on Monday.
Apple stock sees sharp 6% drop
Shares experienced a sharp 6% drop to session lows following Trump’s Truth Social post, where he threatened to impose an additional 50% tariff on Chinese goods unless Beijing removed its retaliatory tariffs on US products.
The president announced on Truth Social that if China does not remove the 34% counter-tariff it imposed late last week, the US will impose an additional 50% tariff on Chinese goods.
“Additionally, all talks with China concerning their requested meetings with us will be terminated!,” Trump wrote.
Tesla stock drops 7%
Tesla’s stock experienced a significant drop of nearly 7%, mirroring the broader market downturn.
This decline was further fueled by Wedbush analyst Dan Ives, a well-known Tesla optimist, revising his price target downwards. Ives attributed this adjustment to “self-created brand issues” that Tesla is currently facing.
These brand issues could encompass a range of factors, including recent controversies surrounding Tesla’s Autopilot feature, concerns about build quality and service issues, and Elon Musk’s unpredictable behavior on social media.
These issues may have negatively impacted consumer sentiment and investor confidence, contributing to the stock’s decline.
Despite these challenges, Tesla remains a dominant player in the electric vehicle market, with strong brand recognition and a loyal customer base.
The company’s innovative technology and ambitious expansion plans continue to attract investors, even amidst market volatility and brand concerns.
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