MW S&P 500 rebound collapses in biggest U-turn since at least 1978. Investors can't shake tariff jitters.

By William Watts

China tariffs caused equities to reverse early rally, strategist says

So much for Turnaround Tuesday. An epic stock-market bounce turned into a historic fizzle, extending the bruising selloff sparked by President Donald Trump's sweeping tariff measures to a fourth straight session.

The S&P 500 SPX saw an intraday gain of 4.05% evaporate to end with a loss of 1.6%, marking its biggest blown percentage gain since Oct. 14, 2008, during the darkest days of the 2007-09 financial crisis. And it's the first time the S&P 500 was up more than 4% at its intraday high but finished with a loss of more than 1%, based on data going back to 1978, according to Dow Jones Market Data.

It was a brutal day across the board:

-- The Dow Jones Industrial Average DJIA rallied 1,461 points, or 3.85%, at its intraday peak, but ended the day down more than 400 points, its biggest erased percentage gain since April 2020.

-- The tech-heavy Nasdaq Composite COMP ended with a loss of 2.3%, erasing an earlier gain of 4.6% for its biggest blown percentage gain since at least 1982.

The rally lost steam in afternoon trading after the White House affirmed it would proceed with tariffs at a rate of 104% on imports from China, marking a further escalation of the trade war. China, which had previously implemented a retaliatory tariff of 34%, has vowed to "fight to the end" in response to the Trump tariff measures.

"Financial markets continue to be driven by the trade war headlines, and the 104% tariff on Chinese imports defined Tuesday's trading session," said Ian Lyngen, rates strategist at BMO Capital Markets. "While there was positive news for risk assets related to bilateral negotiations with South Korea, as well as the White House's plan to give Japan priority in trade talks, at the end of the day, it was the China tariffs that caused equities to reverse the bulk of the day's upside."

Indeed, stocks had appeared to benefit early in the session from remarks by Trump in a social-media post highlighting talks with South Korean officials. Remarks by Treasury Secretary Scott Bessent were also seen as a positive, after he said Monday that he would lead trade negotiations with Japan.

Stocks have cratered since Trump detailed tariff plans in a Rose Garden event after U.S. markets closed on April 2. In the four trading days since then, the S&P 500 has dropped 12.14%, the Dow has shed 10.85% and the Nasdaq has declined 13.26%.

Read: Trump's China tariffs are a 'Category 5 price storm' for U.S. consumers, warns analyst Dan Ives

-William Watts

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April 08, 2025 16:50 ET (20:50 GMT)

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