Wall Street rollercoaster: Tariffs, Fed jitters, and quest for guidance

The bell was rung on Wall Street, but the atmosphere was anything but cheerful. Traders leaned over their monitors, scanning red digits and breaking news headlines. It was a day when there was only one thing certain: uncertainty. The Dow Jones, S&P 500, and Nasdaq all slid lower as investors tried to make sense of a market caught between political drama and central bank caution.

Trade tensions rattle the markets

It started with a jolt. Former President Donald Trump’s latest remarks on global trade sent a chill through the trading floor. Hopes for quick progress on tariffs faded fast. Suddenly, the prospect of new deals with major trading partners seemed remote. The market, already on edge, responded in kind. The Dow lost nearly 390 points, while the S&P 500 and Nasdaq followed suit.

Behind the scenes, officials scrambled to keep lines open. Treasury Secretary Scott Bessent and his team prepared for talks with Chinese counterparts in Switzerland, hoping to ease tensions. But as one market strategist put it, “When policy is made by tweet, you can’t trade on fundamentals. You’re trading on headlines and hoping you’re not the last one out.”

The backdrop was already tense. April had seen the S&P 500 flirt with bear market territory after Trump’s surprise tariffs on nearly all US trading partners. The sell-off was swift and brutal, but just as quickly, a partial pause on tariffs sparked a dramatic rebound. Still, as Morgan Stanley’s equity team noted, “2025 is shaping up to be a pause year-expect volatility, but don’t write off the bull market just yet”.

All eyes on the Fed

As the dust settled from the trade headlines, attention shifted to the Federal Reserve. Would Chair Jerome Powell and his colleagues cut rates, or hold steady? The answer, at least for now, was to wait and watch. The Fed kept its key rate in the 4.25% to 4.5% range, signalling patience as it weighed the impact of Trump’s economic agenda and the risk of recession.

Powell’s press conference offered little comfort. “It remains to be seen how these developments influence future spending and investment,” he said, acknowledging the uncertainty facing American consumers and businesses. Investors, hoping for a clear path forward, instead got a lesson in central bank caution.

Still, there were glimmers of hope. Nearly 75% of S&P 500 companies had beaten profit expectations this quarter, with overall earnings growth nearing 13%. Yet, as one Wall Street analyst remarked, “Earnings can only carry you so far when policy risk is this high. The market wants clarity, but right now, it’s not getting it.”

The day ended with more questions than answers. Stocks closed lower, battered by trade worries and Fed nerves. But if recent months have shown anything, it’s that this market has a knack for bouncing back-sometimes when you least expect it.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.

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