US Stock Markets Open Lower Amid Economic Uncertainty
US stock markets began Thursday on a downward trend as investors grappled with a week of significant volatility and economic concerns. Early trading showed declines across major indices, with investors closely monitoring economic data, rising bond yields, and escalating global tensions. Despite initial losses, stocks showed signs of recovery as the morning progressed.
Early Market Performance
As of 9:37 a.m. ET, the Dow Jones Industrial Average fell by 199.93 points, or 0.5%, settling at 39,393.73. The Nasdaq 100 experienced a slight decline of 31.05 points, or 0.19%, bringing it to 16,356.26, while the S&P 500 dropped 23.58 points, or 0.45%, to 5,244.47. However, by 9:49 a.m. ET, the markets began to rebound. The Dow gained 218.75 points to reach 39,812.41, marking a 0.55% increase. The Nasdaq 100 rose by 132.66 points to 16,519.97, a gain of 0.81%, and the S&P 500 climbed 30.23 points to 5,298.28, up 0.57%.
In the commodities market, gold prices surged by $71.30, or 2.24%, reaching $3,248.80, indicating a shift towards safe-haven assets amid market uncertainty. Conversely, oil prices dipped slightly, down $0.27, or 0.45%, to $59.80 per barrel. Bond markets also saw fluctuations, with the US 10-year Treasury yield rising to 4.507%, an increase of 0.115 points, or 2.618%. The euro strengthened against the dollar, with the EUR/USD pair rising 0.019 to 1.139, reflecting a 1.71% increase. The VIX, known as Wall Street’s fear gauge, jumped by 4.25 points, or 10.44%, to 44.97, underscoring ongoing investor anxiety.
Inflation Data and Economic Outlook
In a notable development, US wholesale prices fell in March for the first time since October 2023, suggesting a potential easing of inflationary pressures. The Labor Department reported that the Producer Price Index (PPI) decreased by 0.4% from the previous month, marking the first monthly decline in five months. Year-over-year, producer prices rose by 2.7%, a slowdown from February’s 3.2% and below the anticipated 3.3% increase.
The decline in wholesale prices was largely attributed to significant drops in energy and food costs. Gasoline prices plummeted by 11.1%, while egg prices, which had previously surged due to bird flu outbreaks, fell by 21.3%. Core wholesale inflation, excluding food and energy, also saw a decrease of 0.1%, its first monthly drop since July. Over the past year, core producer prices rose by 3.3%, again falling short of expectations.
Despite these positive inflation indicators, market participants remain cautious due to escalating trade tensions between the US and China. President Donald Trump has intensified global trade conflicts by raising tariffs on Chinese imports to an unprecedented 145%. Additionally, a 10% tariff has been imposed on imports from most other countries, with potential increases following a 90-day review.
Escalating Trade Tensions
In response to the US tariffs, China announced plans to raise tariffs on a wide range of US goods, increasing rates from 84% to 125%. This move marks a significant escalation in the ongoing trade war between the two largest economies. China’s Finance Ministry condemned the US actions as “economic bullying” and vowed to “resolutely counter and fight to the end.” The new tariffs from China are set to take effect on Saturday.
Chinese President Xi Jinping, during a meeting with Spanish Prime Minister Pedro Sánchez, emphasized that “there are no winners in a tariff war,” asserting that China relies on its own efforts for development and does not fear unreasonable suppression. Beijing also plans to file another complaint with the World Trade Organization regarding the US tariffs.
Global Market Reactions
The uncertainty surrounding trade policies has led to increased volatility in global markets. Although there was some relief when Trump paused tariffs for certain nations, fears persist that prolonged friction between the US and China could hinder global growth and push the US economy closer to recession.
European markets reflected this anxiety, reversing early gains as trade concerns intensified. By late morning in London, the pan-European Stoxx 600 was down 1.3%, Germany’s DAX fell by 1.7%, France’s CAC 40 slipped 1.3%, and the U.K.’s FTSE 100 dropped 0.4%. Investors shifted away from riskier assets, with sectors such as industrials, technology, financials, and energy leading the losses. In contrast, traditionally defensive sectors like utilities and consumer durables outperformed as traders sought safe havens.
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