US stocks dropped sharply for the fourth straight day on Tuesday, with major indexes seeing wild moves as traders took in the latest trade developments.
Stocks jumped in the morning as traders were encouraged by comments from the president indicating Japan was negotiating with the US over tariffs . But the indexes turned red as markets eyed Trump's reciprocal tariffs set to kick in on Wednesday.
The major indexes lost for the fourth straight day on Tuesday, with the Dow Jones Industrial Averaging gaining as much as 1,300 points in the morning before wiping out that gain and losing over 300 points by the market close. The S&P 500 and Nasdaq 100 also erased their earlier 4% gains, losing 1% and 2% respectively.
Here's where the major US indexes stood at 4:00 p.m. ET close on Tuesday:
S&P 500: 4,952.90, down 2.19%
Dow Jones Industrial Average: 37,645.59, down 0.84% (-320 points)
Nasdaq Composite: 15,267.91, down 2.15%
Investors are starved for any good news that could help turn around the stock market's worst streak since 2020. After a wild day of trading on Monday, which included a sudden rally prompted by fake news of a prospective 90-day tariff delay, the market ended mostly lower again.
Why were stocks so volatile Tuesday?
After an initial burst of optimism on the back of potential trade deals with Japan and other allies, traders were digesting fresh tit-for-tat tariff developments on Tuesday afternoon.
The White House said it would ramp up tariffs on China to 104%. That's in response to Beijing's own retaliatory tariffs of 34% on US imports announced last week after Trump's Wednesday "Liberation Day" announcement.
The president said he was waiting for a call from the nation before potentially implementing the new duties tomorrow, but members of Trump's team have said that negotiations with China would not take priority over talks with other nations on a trade deal.
Tensions between the US and China have escalated since the US raised its tariff rate on Chinese goods to 54% last week.
China, which slapped the US with reciprocal tariffs last week, said it would "fight to end" after Trump threatened Monday to impose another 50% tariff on US imports from the nation.
The economic of the tariff plan is outweighing optimism from the early morning that Trump may dial back the intensity of trade war. On Tuesday, the president suggested that the US was making progress with Japan on a trade deal. Meanwhile, US Treasury Secretary Scott Bessent told CNBC that 70 countries had reached out for trade talks.
Market sentiment remains shaky after the latest decline, which marked the worst sell-off since 2020. The CBOE Volatility Index , also known as Wall Street's fear gauge, declined 14% over the past day but remains well above levels from before Trump unveiled his Liberation Day tariff package.
"We expect intraday volatility to continue, as this market tries to read the tea leaves on what the Trump administration and its top economic officials are saying," Clark Bellin, the president and chief investment officer of Bellwether Wealth, wrote in a note.
Correction: April 8, 2025 — An earlier version of this story misstated which day the stock market rallied. It was Tuesday, not Monday.
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