Global stock markets commenced the week under significant pressure, continuing the sell-off that started last week amid escalating U.S.-China trade tensions and growing fears of a global economic slowdown. Investor sentiment remained fragile as the stock markets opened lower on April 7, 2025, with the S&P 500 index experiencing a drop of over 10% in the previous week, erasing nearly $5 trillion in market value. This marked its most significant two-day loss since March 2020, the onset of the COVID-19 pandemic.
The Nasdaq Composite plunged another 10% at the open, deepening its slide into bear market territory. The S&P 500 opened with a 3% gap down, while the Dow Jones Industrial Average (DJIA) also extended its losses. However, a shift in sentiment occurred midday after President Donald Trump indicated a possible softening of the tariff policy.
In a statement, Trump mentioned that tariffs could be suspended for three months for most countries, except China, which has already announced retaliatory measures. This indication of flexibility led to a sharp rebound in U.S. equities. The S&P 500 reversed course and was trading around 0.4% higher by the end of the day, reflecting renewed optimism that trade tensions might ease, at least temporarily.
A standout performer during this turnaround was Nvidia (NVDA), a key player in the 2024 AI-driven tech rally. Nvidia shares opened sharply lower at $87.40, reflecting a 7% gap down due to concerns over increased tariffs on tech products manufactured in China. The early plunge came after Trump’s morning comments threatened even higher tariffs on Chinese imports, raising fears that Nvidia, whose supply chain is intertwined with China, would face higher costs or disruptions.
Yet, as speculation about a tariff exemption or delay began circulating on social media and through financial news outlets, Nvidia staged a dramatic reversal. The stock surged from its intraday lows to touch $100, marking a 7% intraday gain and a remarkable 14% swing from bottom to top. Around 60% of Nvidia’s imports come from Mexico, which falls under the USMCA trade agreement, and 30% from Taiwan, suggesting that the company might not be as affected by tariffs as initially feared.
Despite the late-session rally bringing some relief to shaken markets, the underlying situation remains highly uncertain. Investors are likely to remain cautious as they await formal policy announcements and potential developments in U.S.-China trade talks. The volatility experienced on Monday highlights how quickly sentiment can shift in this environment, particularly for stocks closely tied to global trade dynamics and geopolitical risks.
On April 8, 2025, Wall Street's S&P 500 targets continued to predict a significant rally, even after a flurry of cuts. According to MarketWatch, stocks would need to recover to 6,400 to reach the median of the S&P 500 targets from Wall Street banks, which would represent a 26% rally from Tuesday to the end of the year.
As of April 7, the S&P 500 ended lower after wild swings during the session amid ongoing speculation regarding Trump’s tariff policies. The Dow Jones Industrial Average dropped 349 points, or 1.2%, while the NASDAQ Composite added 0.04%. The S&P 500 index gained 0.2%, but the day’s trading reflected the nervousness of investors following two brutal days of selling.
In a press briefing, Trump reiterated that the United States wasn’t considering pausing the reciprocal tariffs that have wreaked havoc on markets. Earlier in the session, stocks experienced a brief reprieve on unconfirmed reports that Trump was contemplating a pause on his sweeping trade tariffs for 90 days on all countries except China. However, the White House later dismissed this as "fake news." This illustrates the jitteriness of the market following the significant losses it had faced.
Trump stated that the United States would impose an additional 50% tariff on Chinese goods if China did not rescind its recent 34% tariff hike by April 8, 2025. This ultimatum follows China’s retaliatory tariffs and other trade practices that Trump has labeled as abusive. In a sign of potential leeway on tariffs, Treasury Secretary Scott Bessent revealed that he was instructed by Trump to open talks on tariffs. Reports indicated that 50 countries have approached the U.S. seeking negotiations on tariffs.
Trump declared that his new tariffs are the only way to address major trade deficits with China and the European Union, asserting that duties will remain in place and investors must endure the consequences. He also announced the implementation of a 10% universal import tariff, which came into effect on April 5, 2025, with additional higher tariffs on major trade partners set to take effect on April 9, 2025.
The escalation of tariffs has heightened fears of a global trade war, with significant implications for international commerce and economic stability. Goldman Sachs raised its odds of a 2025 recession to 45% from 35% following the latest developments, while JPMorgan increased the probability of a global recession this year to 60%, up from 40%.
Amid this turmoil, the CBOE Volatility Index (VIX) surged above 60 intraday, reaching its highest level since August of the previous year. Although the index has since given back some gains, it still traded close to 50 points, indicating extreme nervousness among investors. The VIX’s futures curve has turned sharply inverted, signaling intense near-term market stress and a surge in demand for short-term hedging.
Markets are now fully pricing in five Federal Reserve rate cuts through 2025 as investors brace for a deeper economic shock. Treasury yields have dropped sharply, with demand rising on expectations of slowing growth. Nvidia led the rebound as investors bought the recent dip, while other tech stocks like Amazon and Meta Platforms also rebounded from session lows, helping the broader market push higher.
However, not all stocks fared well. Apple and Tesla continued to trade in the red, with Tesla facing downgrades from Wall Street analysts. Wedbush cut its price target on Tesla stock to $315 from $550, citing concerns over a brand crisis and a tariff-led hit to demand. The firm estimated that Tesla has lost at least 10% of its future customer base globally due to self-created brand issues, a conservative estimate in their view.
As the market navigates these turbulent waters, the interplay between U.S.-China trade relations and investor sentiment remains a crucial factor to watch. The coming days will be pivotal as traders and analysts assess the impacts of the ongoing tariff saga and its potential ramifications on the broader economic landscape.
