One day after making historic gains, the stock market sold off again.
The S&P 500 lost 3.46% on April 10, pulling back after a 9.52% surge the previous day—the index’s biggest single-day gain since the 2008 financial crisis.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💵
The shocking rally was driven by investor relief after President Donald Trump announced a 90-day pause of the “reciprocal” tariffs he introduced last week.
China is excluded from that pause. The White House has lifted the tariff on China imports to 145% in response to Beijing’s retaliatory tariff, escalating trade tensions between the world’s two largest economies.
Meanwhile, March consumer prices (CPI) unexpectedly declined to 2.4%, down from February’s 2.8% and below the 2.5% forecast. Lower gasoline and used car prices partly drove the decline. However, economists argue that the CPI data for March seems outdated because it likely captured only a fraction of the first wave of Trump’s tariffs.
“An inflation soft print in March needs to be taken with a grain of salt because the trade war against China from where most consumer goods that Americans buy come from has gone into hyperdrive,” Christopher Rupkey, chief economist at FWDBONDS, told Reuters.
“It would be good not to add to the uncertainty out there,” Jamie Dimon said.
Uncertainties still hover
Over the past few days, many hedge fund managers, including Bill Ackman, Stanley Drunckenmiller, and Cathie Wood, have spoken out on Trump’s tariffs, calling for negotiations while setting the alarm on a potential recession.
Jamie Dimon, JPMorgan Chase Chairman and CEO, warned on the morning of April 9 that things “could get worse if we don’t make some progress here.”
Related: Billionaire Bill Ackman gives 7-word warning on tariff war
“If you want to calm down the markets, show progress in those things, then let Scott [Bessent] take the time,” he said on Fox Business. “Trade deals are very large and very complex. They can’t be done overnight, but you really have to have teams working on them to get them right.”
When asked whether he personally expects a recession, Dimon said, “Probably that’s a likely outcome.”
Dimon pointed to Delta Airlines’ removal of their guidance for 2025 on April 9, “and things like that will affect stock prices again. So, it’s not over yet,” he said. “And then you’ve seen tremendous moves in swap prices, asset prices, and Treasury prices.”
“Let them settle down, take a deep breath, negotiate some trade deals. That’s the best thing they can do,” Dimon said.
Related: Analyst sends eye-popping message on Palantir stock amid tariff drop
“We have the strongest economy in the world. It would be good not to add to the uncertainty out there,” he added.
Trump said he watched Dimon’s interview before deciding on a tariff pause, according to the Wall Street Journal.
However, the bigger concern for investors and business leaders is that Trump may change his mind anytime.
Nicolò Tamberi, Centre for Inclusive Trade Policy at the UK’s Sussex University, said uncertainty is becoming a central risk for global commerce.
“The effects of uncertainty can be as bad as tariffs, and there is a massive amount of uncertainty here. So even if Trump does deals to avoid tariffs’ impacts today, maybe he will change his mind tomorrow,” he told the Financial Times.
Analyst sees recession probability up to 40% following tariff pause
Evercore ISI analyst Krishna Guha wrote in a note that despite Trump’s partial pause on tariffs, the probability of a U.S. recession remains elevated at 35% to 40%, according to TheFly.com.
Under the firm’s scenario, tariff rates are expected to peak around 25% before easing to the 15%–17% range.
More Experts
Stanley Druckenmiller sends curt 7-word response to tariff warJim Cramer delivers blunt take on tariffs after stocks crashScott Galloway sends strong message on Social SecuritySuze Orman sends strong message on 401(k)s, recession
Evercore also pointed out that while shifting some imports from China to countries like Vietnam could slightly lower core PCE inflation, roughly 13% of U.S. imports remain tied to Chinese goods that are not easily replaced, leaving limited room for substitution this year.
The S&P 500 is down more than 10% year-to-date.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
