Markets are in a state of chaos after President Trump announced sweeping tariffs that went beyond what analysts were expecting. So what's going on?
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00:00Markets are in a state of chaos after President Trump announced sweeping tariffs that went beyond what analysts were expecting.
00:07So what's going on?
00:08Trump rolled out a 10% baseline tariff on all countries and reciprocal duties that reach as high as the 40% range for some countries.
00:16Experts say this is fueling fears of a recession, as tariffs are likely to boost inflation and that will drive up prices in the U.S. on just about everything.
00:26The markets are also reacting to this announcement.
00:28Growth fears have hit stocks hard.
00:31The Dow fell 4%, the S&P 500 dropped nearly 5%, and the Nasdaq plunged 6% at close.
00:38Those are some of the steepest single-day losses since 2020, when the pandemic shook up Wall Street.
00:44Investors are now rushing to bonds, fearing the fallout from tariffs.
00:48The 10-year U.S. Treasury yield hit its lowest point since October.
00:53And traders feel strongly that the Fed will have to cut rates to help boost the economy.
00:58Another safe bet that people rush to is gold.
01:00It initially spiked but then gave back some of those gains.
01:04Oil markets weren't spared either.
01:06Like crude prices dropped by 7% and globally, oil prices also saw a 6% dip.
01:12The U.S. dollar index also dropped 2% Thursday morning.
01:16Normally, the currency would benefit from the inflationary effect of higher tariffs.
01:20But the trade war has instead boosted expectations that the Fed will cut rates due to weaker economy growth.
01:27And that is dampening sentiment around the dollar strength.
01:30Looking ahead, there are key dates that Wall Street will be keeping an eye on.
01:34The baseline 10% tariff kicks in on April 5th, with higher rates following on April 9th.
01:41So the market turmoil may not be over just yet.