Key Points:
- S&P 500 fell nearly 5% intraday to 5,443.45 before paring losses.
- New U.S. tariffs: 34% on China, 20% on EU, 32% on Taiwan, 24% on Japan, 46% on Vietnam.
The S&P 500 experienced a sharp reversal on Wednesday following U.S. President Donald Trump’s surprise announcement of sweeping tariffs against major global trade partners, triggering broad-based selling in equities. The benchmark index plunged from an intraday high of 5,733.48 to a low of 5,443.45, before modestly recovering to close at 5,519.13.
The chart reflects this dramatic shift: after a quiet consolidation phase, the index spiked higher in early trading—only to be met with aggressive selling after the tariff announcement. The MACD (12,26,9) crossed below the signal line shortly after the peak, while the histogram widened sharply into negative territory, reinforcing the bearish turn.
Markets Reel From Tariff Surprise
Trump’s televised reveal included tariff hikes of 34% on Chinese goods, 20% on the European Union, and upwards of 46% on Vietnam, with Japan and Taiwan also targeted. The move sent shockwaves through global markets—Asian stocks dropped 3%, European futures fell 1.7%, and Apple shares plunged 7% in after-hours trading.
The new levies directly hit the tech supply chain, particularly in Asia, where many components for U.S. electronics are produced. Apple, Intel, and other major U.S. tech names are expected to face tighter margins and higher production costs.
Analysts from several firms have already flagged the move as a potential recession trigger, reminiscent of the economic self-harm seen during the Smoot-Hawley tariff era of the 1930s. U.S. consumer prices are forecast to rise sharply—particularly for autos, where cost increases of $6,000 to $10,000 per vehicle are expected.
Recession Fears Rising
Bond markets responded immediately, with Treasury yields sinking to multi-month lows, as traders piled into safe havens. Fed funds futures are now pricing in 80 basis points of rate cuts by year-end—even as inflation expectations rise. The Federal Reserve may face a difficult balancing act, especially if inflation spikes alongside declining growth.
Despite White House claims that the tariffs are a negotiating tactic, uncertainty is already throttling long-term business confidence. Many firms are pausing capital expenditures until there is clarity on tariff permanence, while retaliatory trade measures from the EU and others appear imminent.
Technical Analysis
The SP500 15-minute chart showcases a dramatic surge followed by a sharp correction. The index rallied strongly to a high of 5733.48, supported by tight upward movement across short MAs (5,10,30), but faced an aggressive sell-off shortly after, plunging to a low of 5443.45. This retracement was swift and heavy, as reflected in the steep decline on the MACD histogram and the bearish crossover.
Picture: SP500 slams the brakes after a rally—correction kicks in, but bulls eye a recovery, as seen on the VT Markets app
After hitting the low, the index began stabilizing and consolidating, hovering near 5519.13. The MACD is attempting a recovery, with histogram bars shifting into green, indicating early signs of renewed buying interest, but the moving averages remain tilted downward—suggesting caution in the near term.
Cautious Forecast
Technically, the S&P 500’s breach below 5,500 suggests fragile sentiment and increased volatility in the sessions ahead. Should it fail to reclaim the 5,600 level soon, a deeper correction toward 5,400 or below remains possible.
Market participants are now bracing for additional headlines, policy responses, and economic fallout. The tariff shock has jolted risk sentiment—and it’s likely only the beginning.
