On-again, off-again tariffs, mass government layoffs, funding cuts and immigration crackdowns have seriously spooked Wall Street, which is emphatically rejecting President Donald Trump’s chaotic economic agenda.
The market that embraced Trump for most of his first term and in the lead-up to his second has turned on the president. The S&P 500 closed in correction territory Thursday, falling 10% from the all-time high it set just three weeks ago.
The Dow is approaching correction too. The tech-heavy Nasdaq fell into a correction more than a week ago.
And the Russell 2000, made up of smaller businesses, which are typically more exposed to shifting economic winds, has fallen a stunning 18.4% from a high hit just after the election, which was within a whisker of its all-time record.
Even as stocks bounced back Friday — the Dow rose 600 points, or 1.4%, the S&P 500 was 1.9% higher and the Nasdaq was up 2.4% — sentiment on Wall Street has been overwhelmingly negative, and stocks are still poised for losses this week. CNN’s Fear and Greed Index has plunged into “Extreme Fear.”
“The stock market is losing its confidence in the Trump 2.0 policies,” said Ed Yardeni, president of Yardeni Research.
Instead, investors have poured money into traditional safe havens like government bonds and gold. Treasury yields, which trade in the opposite direction to prices, have tumbled over the past month. And spot gold prices on Friday hit $3,000 a troy ounce for the first time in history.
Traders have grown increasingly concerned that Trump’s policies could inflict serious damage on the economy. Despite Trump’s insistence that stocks are falling because of the inflationary problems inherited from former President Joe Biden, the market had boomed after Trump’s November election in hopes that his promised tax cuts and deregulation would fuel another economic boom.
But Trump in the months before he took office began threatening massive tariffs on America’s biggest trading partners. The Dow, which was near its record high when Trump started posting messages on Truth Social about tariffs on November 25, hit one more record high a week later but has fallen nearly 10% since. Russell 2000 never recovered.
Gold surging is among several signs that investors are concerned about America’s economic outlook, former Treasury Secretary Larry Summers told CNN on Friday.
“It’s a sign of the amount of uncertainty that’s being created that amidst everything else, the asset that’s done well is gold,” Summers told CNN’s Pamela Brown and Wolf Blitzer. “That’s what people do when they don’t have confidence in the people who are managing the country.”