This week, US stocks displayed notable volatility, marked by a series of rallies and selloffs as markets evaluated the looming risk of a recession stemming from the escalating trade conflict with China. The S&P 500, Dow Jones, and Nasdaq all experienced declines of more than 0.5%. Concurrently, bonds and the dollar faced downward pressure, highlighting ongoing concerns about financial instability within the monetary system and mirroring investor unease regarding uncertain economic policies.
In a series of rapid tariff adjustments, President Trump imposed tariffs of 145% on China, prompting significant retaliation with Chinese tariffs set at 125%. Despite these measures, US tariffs on metals and chemicals remain steadfast. This climate has driven inflation expectations upward, as indicated by the University of Michigan's metrics, while consumer sentiment has sharply declined.
Financial institutions were not immune to these fluctuations, with Wells Fargo and Morgan Stanley experiencing declines between 1% and 2.5%. Contrastingly, JPMorgan reported record revenues, resulting in a positive performance. Despite the market's turbulence, equity indices are expected to conclude the week higher, bolstered by Wednesday's historic rally.
