US stocks were volatile in midday trading on Wednesday, with the S&P 500 briefly falling 0.4 per cent before recovering to trade roughly flat, as investors contend with the fallout from Donald Trump’s aggressive tariffs.
The initial fall in the S&P marked the fifth consecutive day the index had opened lower since Trump unveiled the levies on dozens of the US’s trading partners, wiping more than $5tn from the S&P.
The Nasdaq Composite was up 0.6 per cent in midday trading in New York.
US Treasuries were hit hard on Wednesday, with the 10-year yield, a global benchmark for borrowing costs, jumping to 4.51 per cent before easing to 4.43 per cent, up 0.13 percentage points on the day and rising from less than 3.9 per cent on Monday.
The market ructions came shortly after China announced an additional retaliatory tariff of 50 per cent on US imports, escalating the trade war between the world’s two biggest economies.
Beijing’s finance ministry said on Wednesday that its new levies would apply on top of its previously announced 34 per cent tariffs on US imports. It added that the duties would take effect on Thursday.
The latest salvo came as market turmoil intensified on Wednesday after Trump’s sweeping “reciprocal” tariffs took effect.
Global markets were also rattled on Wednesday, with the Stoxx Europe 600 down 4 per cent, the FTSE 100 falling 3.4 per cent and Germany’s Dax down 3.5 per cent.
Investors and economists have warned that Trump’s tariffs have increased the risk of a recession in the US, the world’s biggest economy, as well as a new bout of inflation.
Ed Yardeni of Yardeni Associates said the sell-off in Treasuries, typically a haven for investors during periods of market stress, was signalling that the “Trump administration may be playing with liquid nitro”.