U.S. stocks on Thursday are giving back a chunk of their historic gains from the day before as Wall Street weighs a global trade war that has cooled in temperature but is still threatening the economy.
The S&P 500 was down three per cent, a day after surging 9.5 per cent following President Donald Trump’s decision to pause many of his tariffs worldwide.
The Dow Jones Industrial Average was down 981 points, or 2.4 per cent, as of 10:10 a.m. Eastern time, and the Nasdaq composite was 3.7 per cent lower.
The Toronto Stock Exchange was down nearly 2.5 per cent.
Even a better-than-expected report on inflation Thursday morning wasn’t enough to get U.S. stocks to add to their surges from the day before, including the S&P 500’s third-best since 1940.
Economists said the data wasn’t very useful because it offered a view only of the past, when inflation may rise in coming months because of tariffs.
A better-than-expected report on joblessness didn’t help much either, with Wall Street’s focus entirely on what’s to come.
“Trump blinks,” UBS strategist Bhanu Baweja wrote in a report about the president’s decision on tariffs, “but the damage isn’t all undone.”
Trump has focused more on China, raising his tariffs on its products to 125 per cent.
Get weekly money news
Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday.
Even if that were to get negotiated down to something like 50 per cent, and even if only 10 per cent tariffs remained on other countries, Baweja said the hit to the U.S. economy could still be large enough to hurt expected growth for upcoming U.S. corporate profits.
China, meanwhile, has reached out to other countries around the world in hopes of forming a united front against Trump. The European Union, though, on Thursday said it will put its trade retaliation measures on hold for 90 days and leave room for a negotiated solution.
Trump and his Treasury secretary, Scott Bessent, sent a clear message to other countries Wednesday after announcing their tariff pause: “Do not retaliate, and you will be rewarded.”
Many on Wall Street are preparing for more wild swings in the market, after the S&P 500 at one point nearly dropped into a “bear market” by almost closing 20 per cent below its record.
Often, the whipsaw moves have come not just day to day but also hour to hour. The S&P 500 still remains below where it was when Trump announced his sweeping set of tariffs last week on “Liberation Day.”
“Everything is still very volatile, because with Donald Trump, you don’t know what to expect,” said Francis Lun, chief executive of Geo Securities. “This is really big uncertainty in the market. The threat of recession has not faded.”
One encouraging signal, though, is coming from the bond market, where stress seems to be easing.
The bond market has historically played the role of enforcer against politicians and economic policies it deemed imprudent. It helped topple the United Kingdom’s Liz Truss in 2022, for example, whose 49 days made her Britain’s shortest-serving prime minister.
James Carville, adviser to former U.S. President Bill Clinton, also famously said he’d like to be reincarnated as the bond market because of how much power it wields.
Earlier this week, big jumps for U.S. Treasury yields had rattled the market, so much that Trump said Wednesday he had been watching how investors were “getting a little queasy.”
Several reasons could have been behind the sharp, sudden rise, including hedge funds having to sell their Treasurys in order to raise cash or investors outside the United States dumping their U.S. investments because of the trade war.
Regardless of the reasons behind it, higher yields on Treasurys crank up pressure on the stock market and push rates higher for mortgages and other loans for U.S. households and businesses.
But the 10-year Treasury yield has calmed over the last day, following Trump’s U-turn on tariffs, and was sitting at 4.30 per cent. That’s after it had shot up to nearly 4.50 per cent Wednesday morning from just 4.01 per cent at the end of last week.
In stock markets abroad, indexes rallied across Europe and Asia in their first chances to trade following Trump’s pause. Japan’s Nikkei 225 surged 9.1 per cent, South Korea’s Kospi leaped 6.6 per cent and Germany’s DAX returned 5.2 per cent.
– With files from Global News’ Ari Rabinovitch
© 2025 The Canadian Press
