‘Tariff pause’ rally ends where it began: Wall Street opens down by 2%

Wall Street opened significantly lower on Thursday, erasing some of the previous session’s historic gains after March’s inflation data fell short of expectations.

U.S. consumer inflation contracted 0.1% from a month earlier in a reading that was lower than analyst expectations. Some market watchers said the inflation reading boosts the odds of Federal Reserve interest rate cuts.

All three major indices were firmly in the red, down about 2%, after posting some of the largest single-day gains in history the day before.

About 15 minutes into trading, the Dow Jones Industrial Average, which tracks 30 major American companies, was down 1.8% at 39,859.39. The broad-based S&P 500, representing a wider range of U.S. businesses, fell 2.2% to 5,335.61, while the tech-rich Nasdaq Composite Index, which focuses on technology companies, shed 2.8% to 16,653.99.

At Wednesday’s close, the Dow Jones surged 7.87%, or 2,962.86 points, to finish at 40,608.45. The S&P 500 rose 9.52% to 5,456.90, marking its largest daily gain since the 2008 global financial crisis. The Nasdaq jumped 12.16% to 17,124.97, recording its second-best day ever and the biggest rise since January 2001.

Is another wave of sell-offs coming?

But analysts described the inflation reading as a secondary issue early Thursday compared with reverberations from Trump’s tariff actions on Wednesday, which prompted huge equity rallies in Asia and Europe.

The “backtracking” in U.S. stocks “is not surprising,” said Briefing.com analyst Patrick O’Hare.

“Given the scope of yesterday’s gains, we suspect plenty of participants saw that as a gift that made them close to whole again in terms of the tariff sell-off and are opting to get out knowing that the tariff, economic, and earnings uncertainty was not resolved with yesterday’s 90-day pause (key word) and escalated tariff action for China.”

Global markets were rattled by Trump’s sweeping tariff actions, lifting the yields on U.S. Treasury bonds that some analysts say constituted the critical factor in Trump’s policy reversal.