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- S&P 500 ends nine-day rally, dropping 0.64% amid rising tariff tensions and trade uncertainty.
- President Trump proposes a 100% tariff on foreign films, pushing Netflix and Paramount shares lower.
- Investors remain cautious ahead of the Fed decision, with skepticism over trade deal progress.
U.S. stocks dropped on Monday, ending a nine-day rally that had lasted since 2004. The longest winning run for the S&P 500 in nearly two decades came to an end on Wednesday when it closed 0.64% lower at 5,650.38. The Dow Jones Industrial Average fell 0.24% to finish at 41,218.83, and the Nasdaq Composite lost 0.74% to 17,844.24.
The market was pared back by tensions over tariffs among other trade issues. On the other hand, President Trump turned up the rhetoric of tariffs over the weekend, being just as tough, with a 100% tariff on foreign films being proposed.
The reaction quickly drove shares of companies like Netflix and Paramount into sharp declines. It also increased uncertainty regarding trade talks with China. Trump said he had no plans to meet with President Xi Jinping, dashing hopes for the resumption of negotiations.
Overall, losses across major indexes rose throughout the day. After the session, the market found some sort of support afterward. Bloomberg also reported that India will offer tariff-free access to certain other goods on a reciprocal basis, also helping to ease market nerves.
S&P 500 Faces Uncertainty
While positive reports were made, investors remained skeptical. Scott Bessent, Treasury Secretary, echoed Trump’s comments earlier, saying that trade deals could be closer than expected. Trump said that new trade agreements could be closed out this week. But investors seemed reluctant, unwilling to bet on the outcome and timing of such a deal.
The Federal Reserve’s crucial decision on interest rates also comes ahead of the market pullback. The upcoming Fed Meeting is a key event in the market, as investors are only pricing in a 3.2% chance of a rate cut.
The market watches Fed chair Jerome Powell for clues on the economic outlook, especially with ongoing trade uncertainty. Market sentiment in the coming days could be significantly impacted by how the Fed responds.
The market has taken a big step back, however, as trade tensions continue to grow ahead of a Federal Reserve decision. The investor skepticism of recently released positive economic data and even reports of a possible trade agreement remains high. In the near future, trade negotiations will follow steps, and the Fed’s interest rate actions will determine the market direction.
