Stocks Drop as Economic Fears Spur Flight to Bonds: Markets Wrap

The yield on 10-year Treasuries declined eight basis points to 4.22%. The Bloomberg Dollar Spot Index wavered.

“Markets continue to prove sensitive to trade policy, as considerable uncertainty remains over the size and scope of tariffs to be implemented,” said Jason Pride and Michael Reynolds at Glenmede. “Just as important may be how long the tariffs stay on. Are they temporary in order to extract concessions, or are they a new permanent fixture of US trade policy?”

To Sam Stovall at CFRA, how long this period of investor caution persists depends on how quickly it will take the global trade clouds, and the resulting threat of recession, to dissipate.

The latest moves mark an abrupt about-face for markets, where the dominant driver of the last few years had been the surprising resilience of the US economy even as growth weakened overseas. That’s shaking the aura of economic and market exceptionalism that has dominated for more than a decade.

Investors are turning increasingly unnerved by whipsawing tariff policy, sticky inflation and the unknown pace of the Fed’s interest-rate easing. The Nasdaq 100 Index briefly slumped into a correction Friday as investors dumped the sector that propelled the stock market over the past two years.

From rookie retail traders to hedge fund pros, no one knows what the eventual cost of Trump’s sweeping policies really are. His pro-growth plans were tax cuts, deregulation and energy dominance. Tariffs were supposed to bring manufacturing back to the US and create jobs. But so far there’s little evidence of that.

All of this has mom-and-pop investors spooked. For the first time since 2022, the majority of individual investors say they believe stock prices will drop over the next six months, according to a survey by the American Association of Individual Investors. Fewer than 20% say they expect prices to rise over that period.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1.8% as of 10:17 a.m. New York time

• The Nasdaq 100 fell 2.6%

• The Dow Jones Industrial Average fell 0.8%

• The Stoxx Europe 600 fell 1.1%

• The MSCI World Index fell 1.6%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0837

• The British pound was little changed at $1.2914

• The Japanese yen rose 0.8% to 146.92 per dollar

Cryptocurrencies

• Bitcoin fell 4.3% to $79,520.81

• Ether fell 1.2% to $2,023.8

Bonds

• The yield on 10-year Treasuries declined eight basis points to 4.22%

• Germany’s 10-year yield declined two basis points to 2.81%

• Britain’s 10-year yield was little changed at 4.64%

Commodities

–With assistance from Sujata Rao and Catherine Bosley.

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