The correction in the US stock markets continues, with the major equity indexes posting another weekly loss. The S&P 500 fell 1.5%, while the Nasdaq finished 3.5% lower, with the VIX volatility index pressuring higher. Treasury Bonds rates were unchanged, with higher demand to safer assets, while US high yield spreads widened by almost 30bps.
Trump announced a 25% tariff on auto imports, a measure that could add thousands of dollars to the cost of a vehicle in the US. Shares in carmakers such as General Motors and Ford tumbled. Meanwhile, a US consumer confidence survey plunged to its lowest level in more than four years, with households fearing a recession and higher inflation because of tariffs.
While investors remain worried about signs that the trade war could slowdown growth and reignite inflation, main focus this week will be on the announcement of Trump’s “reciprocal” tariffs on Wednesday and the monthly US Payroll Jobs report on Friday.
The current uncertainty has led Wall Street analysts to pull back on economic and corporate earnings forecasts, as they await to see how trade policy will influence overall businesses and consumers behavior. Markets have also increased the number of rate cuts from the Federal Reserve in 2025, from 35bps in the beginning of the year, to the current 75bps.
