President Donald Trump roiled markets once again on Wednesday with tweets that escalated tensions with Russia, erasing recent gains.
- President Donald Trump roiled markets once again on Wednesday with tweets that escalated tensions with Russia.
- Traders shrugged off monthly US consumer price data that was in line with economist estimates.
- The loss marks a reversal of two days of gains driven largely by reduced fears around a global trade war.
- Follow the Dow Jones industrial average and Nasdaq 100 index.
US stocks tumbled Wednesday as President Donald Trump escalated tensions with Russia through a series of tweets, rattling investor nerves at a time when fears of a global trade war were starting to ebb.
Equity futures extended losses just before 7 a.m. ET as Trump tweeted: "Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and "smart!" You shouldn't be partners with a Gas Killing Animal who kills his people and enjoys it!"
The decline worsened on a second Russia-focused tweet from Trump roughly 45 minutes later, and pre-market losses reached as much as 1.2%. In early regular trading, the Dow Jones industrial average sank as much as 0.9%, or 212 points, while the S&P 500 lost 0.5%. The more tech-heavy Nasdaq 100 index slid 0.3%.
As Trump's latest tweets dominated headlines, US investors shrugged off a Labor Department report showing US consumer prices in March were in line with economist estimates. Traders have been keenly focused on inflation readings in recent months as they search for any signals that the Federal Reserve will alter its pace of monetary tightening.
Yet while the degree of Wednesday's stock market decline may seem jarring, it should be noted that the Dow surged almost 500 points over the two days prior, meaning this decline hasn't even erased half of that. Overall, the market's recent propensity for large moves shows that the low-volatility doldrums of 2017 are over, and suggests multi-hundred-point Dow fluctuations are the new normal.
Of course, Trump hasn't helped matters much, and the surge in volatility is a clear byproduct of his recent actions. Prior to today's situation with Russia, the president had been locked in a trade stare down with China for weeks, stoking investor fears of retaliation.
It's also possible that the selling is being driven by a shift in investment tactics that's been highlighted by Bank of America. After years of riding the so-called "buy the dip" strategy to success, investors seem to have flipped the switch, and are now "selling the rip" — or using periods of strength as an excuse to offload holdings.
Check out Business Insider's in-depth coverage of the market's recent turbulence:
- BANK OF AMERICA: A wildly successful stock-trading strategy is no longer working — and it signals that a bubble has burst
- One Wall Street firm just made a big change to its outlook — and it perfectly encapsulates the challenges ahead for markets
- The market's most outspoken bear sees recent turbulence fueling his forecast of a 60% stock drop — and says it's too late to get out
- Bank of America knows what it'll take to send the market into a 'full bull detox' — and we're dangerously close
- 'This time, things really are different': A $150 billion investment chief explains why he's so nervous about the 'wild card' trade war
- The best stock trade of 2018 is a reversal from last year as turbulence rocks the market
- BANK OF AMERICA: There's a huge shift happening in markets — and it's threatening to derail a favorite investor strategy
In the bond market, the 10-year US Treasury yield fell two basis points, to 2.76%, near the key 3% level that traders are closely watching. Bank of America Merrill Lynch has said a trade war could move yields higher in the medium-to-long term.
Here's a rundown of other asset classes:
- US Dollar Index, -0.1%
- Crude oil (WTI), -2.71%
- Cboe Volatility Index (VIX), +0.7%
- Gold, +0.8%
- Bitcoin, +1.70%