The Dow Jones Industrial Average dropped 155.83 points on Tuesday, finishing at 40,368.96. This drop comes on the heels of two consecutive up-with-the-market performance palindromes for the three primary U.S. equity gauges. The S&P 500 fell by just 0.17% to end the day at 5,396.63. At the same time, the tech-heavy Nasdaq Composite nudged down 0.05%, closing at 16,823.17.
Despite these losses, market analysts point to a positive turn in sentiment over tariff unpredictability. Larry Tentarelli, founder of the Blue Chip Daily Trend Report, noted that the worst-case scenario is now off the table. As I noted above, just as we report out good news, a headline is threatening to break any day. When it does, the market may be down 3% that day. This announcement further illustrates the continued confusion in regards to trade policies and how they will affect markets moving forward.
The other three major indexes—Dow, S&P 500 and Nasdaq—are pushing to reverse notable losses. When former President Trump first announced those tariffs, the Dow and Nasdaq plunged immediately by 4.4% and the S&P 500 by 4.8%. The Cboe Volatility Index (VIX), often called the market’s fear gauge, plunged last week to near 30. Just last week—before the strike—it had shot up to nearly 60.
On the earnings front, on a brighter note, many banks announced earnings that beat expectations. Bank of America shares jumped by 3.6% after beating analyst projections by 29%. In contrast, Citigroup celebrated a pop, with its shares climbing 1.8% on the same driver. Those wildly impressive performances brought a bit of reassuring stability to the market, in the face of everything else that’s going on.
As they ride the winds of this stormy season, market observers continue to be appropriately careful with their predictions. The recent bust hasn’t erased the gains made over previous sessions. There is a very large and real risk to all this – a rapid change in investor sentiment.