In the recent afternoon trading session on Tuesday, US stocks experienced a significant decline, leading to a sharp drop in the market. The S&P 500 narrowly avoided entering a bear market after the announcement from the White House regarding plans to increase the overall tariff rate on China to 104%, effective at 12:01 a.m. ET.
Following this news, both the S&P 500 and the Nasdaq Composite saw their gains of over 4% reverse and fell approximately 1.6% and 2.2%, respectively. Similarly, the Dow Jones Industrial Average slid about 0.8%, dropping over 300 points after earlier gaining more than 1,300 points.
Historical data from Yahoo Finance revealed that heightened volatility of around 6% or more for three consecutive days has only occurred on three other occasions in history: during the 1987 market crash, the 2008 financial crisis, and the lows of the pandemic.
In a briefing earlier on Tuesday, White House press secretary Karoline Leavitt emphasized the self-reliance of Americans, stating that the US is less dependent on other countries compared to how much other countries depend on the US. She also expressed confidence in President Trump's steadfastness, referring to him as having a strong resolve.
Market activity had been tumultuous following Trump's tariff announcement, with buyers cautiously reentering the market after a volatile session on Monday, where the Dow dropped 350 points and the S&P 500 suffered a historic three-day loss.
While Treasury Secretary Scott Bessent's positive remarks about the start of trade talks with Japan initially boosted investor sentiment, concerns persisted about the White House's stance on tariffs following trade adviser Peter Navarro's comments to the Financial Times. The White House affirmed that reciprocal tariffs would proceed as planned despite ongoing negotiations. China responded by stating its intent to oppose US tariffs.
Prominent figures in the financial sector, such as JPMorgan's Jamie Dimon and BlackRock's Larry Fink, have begun cautioning about the potential repercussions of the tariffs imposed by Trump, with even Elon Musk, CEO of Tesla and a Trump adviser, offering subtle criticisms in recent days.