The stock market is like a tightly coiled spring ready to burst into action with a strong rebound, investors are just waiting for a sign.

After the savage selloff of last week, Monday was a day of wild swings. The S&P 500 rose as high as 3.4% and fell as low as 4.7% before closing down slightly -- the widest intraday spread since March 2020. The brief rally came after a false report that President Donald Trump is considering a 90-day pause on reciprocal tariffs. The White House later described it as "fake news."

If nothing else, the market move highlighted the potential for a comeback -- should trade developments permit. But where might the catalyst come from?

A deal between the U.S. and China, or negotiations of any sort, seem a stretch now. Beijing vowed to "fight to the end" in a statement overnight after Trump threatened 50% tariffs on top of the 34% levies he announced last week.

That's a blow for the stock market -- China's retaliation Friday seemed to turbocharge the selloff and positive developments between the world's two largest economies could repair a significant chunk of the damage.

However, if investors park that standoff for now, there are hopeful signs that deals can be reached elsewhere. Treasury Secretary Scott Bessent will lead negotiations with Japan after what he called a "very constructive" phone call between Trump and Prime Minister Shigeru Ishiba.

The European Union is also making encouraging noises. European Commission President Ursula von der Leyen said the bloc is ready to negotiate and has offered "zero-for-zero" tariffs. Trump rejected that, and the EU is preparing countermeasures -- but it's a start.

China aside, the world seems open to negotiation -- and it's not fanciful to think Beijing will soften its hard-line stance given the importance of American consumers to its economy. The U.S. imported $438.9 billion in goods from China in 2024.

As the Wednesday deadline for reciprocal tariffs to take effect approaches, deals or even talks with major trading partners could kick-start a stock market comeback.

-- Callum Keown

***

Wall Street Assesses How Turbulence Could Affect Main Street

Wall Street just got hit hard, and Main Street could be next. Though a recession isn't guaranteed, the market turmoil has economists and market analysts revising their economic outlooks and raising the risk of a downturn. People are now wondering whether market turbulence could spill over into the economy.

   -- Consumer spending, contributing 70% of U.S. economic growth, and the 
      labor market will help determine the effect trade strife has on the 
      economic outlook. There are indicators, such as spending by affluent 
      households on things like air travel, Broadway shows, and restaurants. 
 
   -- Tariffs could also translate into job losses if employers pull back 
      because their costs are increasing. So far, the soft sentiment data has 
      been negative. There has been a reversal in corporate capital spending 
      plans in recent months and corporate confidence has slumped. 
 
   -- U.S. employers announced 275,240 job cuts in March, a 60% increase from 
      February, according to placement firm Challenger, Gray & Christmas. The 
      firm noted that most stem from Department of Government Efficiency cuts, 
      some of which have been stalled by legal challenges. 
 
   -- Huntington Bank's Chief Economist Olu Omodunbi says he will be watching 
      the guidance that comes out of the coming earnings season that kicks off 
      on Friday with big banks. He puts the odds of the U.S. entering a 
      recession in 2025 at about 50%. 

What's Next: Larry Fink, co-founder and CEO of BlackRock, the world's largest money-management firm, said the economy is weakening and that CEOs he speaks with view it as in a recession already. He called on the Trump administration to focus on the pro-growth agenda it campaigned on.

-- Megan Leonhardt and Rebecca Ungarino

***

Upheaval Has Turned Even Safe Havens Sour

The market upheaval of the past few days has turned even safe havens such as long-term Treasury bonds and gold into losing bets. Long-term Treasuries fell their most in nearly two years even as stocks steadied on Monday, and gold is back well below its recent peak.

   -- The iShares 20+ Year Treasury Bond exchange-traded fund fell 3%, its 
      biggest percentage drop since May 1, 2023. A steadying stock market may 
      have prompted bond investors to take their profit after big recent gains. 
      Treasury bonds lately have moved inversely with stocks. And 30-year 
      Treasuries fell 4%. 
 
   -- There isn't a single precipitating factor for the bond market losses 
      Monday, but long-dated Treasuries had rallied significantly in the prior 
      two weeks. Concern about a potential recession boosted prices, and the 
      broad tariffs unveiled last week added to the fear. Haven assets tend to 
      rise in price when worry grows. 
 
   -- Gold prices were back below $3,000 an ounce and have tumbled more than 5% 
      in the past week since hitting a new all-time high of just below $3200 an 
      ounce. Gold is still up about 13% this year, largely because of heavy 
      buying by central banks, a weaker dollar, and renewed interest from 
      retail investors. 
 
   -- Inflation could increase if the Trump tariffs are implemented, which 
      would be bad for bonds because it would reduce the real value of their 
      interest payments. Good news has come in energy markets, where oil prices 
      have been under pressure. The price of U.S. crude ended at $61 a barrel, 
      after dropping nearly $10 recently. 

What's Next: Another possibility is that overseas investors could be repatriating funds and selling Treasuries. Bond analysts at J.P. Morgan said the selloff reflected "concerns over rising deficits and weakened foreign demand."

-- Andrew Bary and Paul R. La Monica

***

Nippon Steel's Deal for U.S. Steel Could Be Revived

Nippon Steel's deal for U.S. Steel could be revived now that it is under a new review by the Trump administration, which says it's examining whether further action may be appropriate. Activist investor Ancora appears to support a transaction at around $55 a share, which it had previously resisted.

   -- Ancora is still seeking control of U.S. Steel with a new slate of 
      directors. That board, if elected, would seek to complete the sale to 
      Japan-based Nippon Steel for $55 a share. President Joe Biden had blocked 
      their deal on national security grounds, and they sued to reverse that. 
 
   -- But earlier in the process, Ancora appeared dead set against the Nippon 
      deal. Ancora sought to replace U.S. Steel CEO David Burrit with former 
      Stelco CEO Alan Kesenbaum to "make U.S. Steel great again in the public 
      market." It now says prospects for the transaction have significantly 
      improved. 
 
   -- Nippon promised $3 billion of U.S. investments to make the deal happen. 
      That amount could rise to as much as $7 billion, reports said. Ancora 
      said while it thinks the government won't reverse its position, it isn't 
      going to stand in the way of a deal if it is approved. 
 
   -- President Donald Trump's tariffs on steel and aluminum, and benchmark 
      steel prices have risen to $900 per ton, from about $700 as of the end of 
      2024. Japan is sending a trade delegation to Washington to negotiate 
      tariffs after Trump imposed a 24% reciprocal levy. 

What's Next: If the Nippon deal doesn't go through, Ancora wants to sell Big River Steel, which U.S. Steel owns, for $8 billion. It wants to return $5 billion, or almost $20 a share, to investors as a special dividend. It would use the remaining $3 billion to invest in existing facilities to boost earnings by "120%."

-- Al Root

***

MicroStrategy Has an Unrealized Bitcoin Loss and Sees a Net Loss

MicroStrategy, the Virginia-based business-analytics software maker that has made itself into the largest corporate Bitcoin owner, has a nearly $6 billion unrealized loss on its crypto assets for the first quarter and expects to report a net loss for the period despite a $1.7 billion tax benefit.

   -- The disclosure comes as Bitcoin's price has weakened to around $78,100 a 
      coin as of Monday afternoon, the lowest since November 2024. Bitcoin is 
      down more than 16% so far this year, said Dow Jones Market Data. That's 
      despite a crypto-friendly administration in Washington. 
 
   -- The company, which now calls itself Strategy, disclosed in a filing that 
      it didn't buy any Bitcoin from March 31 to April 6, and the last 
      purchases it did make were for the week through March 30, totaling $1.9 
      billion. It spent $7.66 billion on Bitcoin purchases in the first quarter 
      and now has a total of 528,185 of the tokens. 
 
   -- MarketWatch notes that after five years of buying Bitcoin and not selling 
      any, MicroStrategy's holdings have a value of about $41.7 billion, about 
      17% more than what it spent to acquire the tokens. Bitcoin reached a 
      record high of $106,734 in December 2024. 

What's Next: Mobile brokerage firm Robinhood is also well below its record high. Last year, investors snapped up the shares on the belief its crypto strategy would boost results. But the forecast is now cloudier with the drop in Bitcoin prices and worries investors may pull money out of their brokerage accounts.

-- Liz Moyer and Andrew Welsch

***

-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 08, 2025 06:48 ET (10:48 GMT)

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