The New York Stock Exchange ended the day with a decline due to ongoing concerns about U.S. President Donald Trump’s tariff policy.

At the close, the Dow Jones index lost over 1000 points and fell by 2.50 percent to 39,593.66 points. The S&P 500 index decreased by 3.46 percent to 5,268.05 points, while the Nasdaq index dropped by 4.31 percent to 16,387.31 points. After a rally on Wednesday in the markets following Trump’s decision to postpone mutual tariffs just 24 hours after they came into effect, selling pressure increased as tariff concerns resurfaced. Trump, in a post on his Truth Social social media account, had approved delaying additional tariffs on trading partners for 90 days and implementing a 10% basic tariff rate during this period. However, he had announced an increase in the tariff on China by 125%. Following this announcement, the European Union (EU) stated that it would suspend the measures prepared against the U.S. tariffs on steel and aluminum imports for 90 days, while the Chinese government sent a message that they would not back down in the escalating tariff tensions.

The White House clarified the tariff rate for China, stating that the customs duty imposed on China that Trump announced as being raised to 125% yesterday only covered reciprocal tariffs with the total tariff rate reaching 145% when including those implemented due to the fentanyl crisis. Analysts expressed concerns that the escalating trade tensions between Washington and Beijing overshadowed positive economic data in the U.S. and optimism about trade negotiations, triggering sales out of fear of lasting economic damage from the trade war between the world’s two largest economies. Analysts also indicated that despite the halt in additional tariffs for 90 days, uncertainties remain, and they expected market volatility to persist as investors act cautiously and evaluate the economic consequences.

With these developments, the VIX Index, also known as the “fear index,” rose by over 21% and surpassed a value of 40. On the macroeconomic data front, figures released today in the U.S. showed that inflation continued to slow down in the country. The Consumer Price Index (CPI) declined by 0.1% on a monthly basis in March, falling below expectations with a 2.4% annual rate. This marks the first monthly decline in the CPI since May 2020. The core CPI, which excludes volatile energy and food prices, also recorded a 0.1% monthly increase and a 2.8% annual increase in March, both below expectations. Analysts noted that an upward movement in inflation data has not been observed yet and pointed out that the effects of the imposed tariffs are expected to be seen in the coming months. Moreover, the number of first-time applicants for unemployment benefits in the U.S. rose by 4,000 to 223,000 in the week ended April 5, in line with market expectations.

TARIFF UNCERTAINTY AFFECTING THE FED
Tariff uncertainty complicates the path the Federal Reserve (Fed) will follow in its monetary policy, and statements from Fed officials were closely monitored. Chicago Fed President Austan Goolsbee stated that tariffs were a “stagflationist shock” that posed a challenge to the Fed’s price stability and maximum employment goals. Goolsbee mentioned that the faster uncertainty decreases, the quicker the Fed can reduce borrowing costs. Dallas Fed President Lorie Logan conveyed that higher tariffs than anticipated were likely to increase both unemployment and inflation. Kansas City Fed President Jeff Schmid stated that if they had to balance their price stability targets with full employment goals, they would prioritize controlling inflation. Fed Board Member Michelle Bowman also mentioned that the U.S. economy continues to remain strong but expressed uncertainty about the effects of trade policies. Analysts highlighted that for more information on the inflation outlook in the U.S. and the economy’s trajectory, the Producer Price Index (PPI) to be released tomorrow and the financial statements of major banks such as JPMorgan Chase, Wells Fargo, and Morgan Stanley would be closely followed by investors.