Wall Street sees big early gain vanish as uncertainty about Trump’s tariffs reigns

It “seems like we were very oversold and there’s hope that things may de-escalate from here,” said Sameer Samana, a senior global market strategist for Wells Fargo Investment Institute, He, though, also suggested staying cautious “as the key countries continue to escalate, rather than de-escalate.”

China said it will “fight to the end” and warned of countermeasures after Trump threatened on Monday to raise his tariffs even further on the world’s second-largest economy.

Such a bounce back for global markets perhaps shouldn’t be a surprise. Stocks don’t go in one direction forever, and some of the best days in the market’s history have been clustered around some of its worst days.

The biggest gain for the S&P 500 since World War II was an 11.6 per cent surge on October 13, 2008, for example. That was during the depths of the Great Recession, when worries were high that the financial system was collapsing and the S&P 500 was in the midst of a nearly 57 per cent plunge from its peak in late 2007 until its bottom in March 2009. A couple weeks later, the index had another one of its best days in history, soaring 10.8 per cent.

That’s one of the reasons many financial advisers suggest not trying to time the market and selling stocks and other investments meant for the long term when nervous, because of the risk of missing out on such huge up days.

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Trump’s trade war is an attack on the globalisation that’s shaped the global economy and helped bring down prices but also caused manufacturing jobs to leave for other countries. He has said he wants to bring factory jobs back to the United States, a process that could take years. Trump also says he wants to narrow trade deficits with other countries.

In the bond market, Treasury yields rallied for a second straight day to recover more of their sharp losses from prior months. The yield on the 10-year Treasury rose to 4.23 per cent from 4.15 per cent late Monday and from just 4.01 per cent late Friday.

Yields tend to rise with expectations for the US economy’s strength and for inflation.

AP