"If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks."- John C. Bogle
This insightful quote by John C. Bogle underscores the inherent volatility of the stock market and the importance of risk tolerance for investors. Market downturns, sometimes significant, are inevitable, and investors must be prepared both financially and emotionally to endure such declines.
Bogle, the founder of Vanguard and a pioneer of index investing, emphasized that understanding one's own capacity to withstand market fluctuations is crucial. Investing in stocks requires a long-term perspective and the fortitude to stay the course during market turbulence.
Market Wrap
Markets Whipsaw on Tariff Chaos and Rumor-Driven Reversals
Mixed Signals on Tariff Delays Drive Intraday Swings:
Markets surged midday on reports that President Trump might delay new tariffs by 90 days to allow for more negotiations. However, the White House later denied these reports, reversing gains and contributing to the nearly 1,100-point swing in the Dow.
Escalating China Trade Tensions:
President Trump also threatened to impose a new round of 50% tariffs on Chinese goods if Beijing does not roll back its own recent tariff hikes.
China Responds to U.S. Tariff Threats:
China firmly pushed back against President Trump’s 50% tariff threat, with the Chinese Embassy in Washington stating that pressure and threats are not effective tools for negotiation. The foreign ministry condemned the move as “bullying” and reiterated that China would take all necessary steps to defend its economic interests.
Global Market Impact:
The tariff threats sent shockwaves through global markets, leading to significant declines. Germany’s DAX fell 6.5% to 19,311.29, and France’s CAC 40 dropped 5.9% to 6,844.96. In Asia, Japan’s Nikkei 225 plunged 7.8% to 31,136.58, while Hong Kong’s Hang Seng plummeted 13.2% to 19,828.30 — its worst single-day drop since 1997 — as investors braced for broader economic fallout.
Recession Fears Intensify:
Goldman Sachs revised its U.S. Q4 GDP growth forecast down to 0.5% and raised its recession odds to 45%, citing the trade war’s potential economic drag. JPMorgan CEO Jamie Dimon echoed the concerns, warning that the administration’s protectionist stance could weaken global alliances and stall growth.
Dollar and Crypto Weaken:
The U.S. dollar touched a three-month low amid growing economic uncertainty. Bitcoin slid to around $76,500, its lowest level since November, extending declines in crypto-related equities and reflecting a broader risk-off sentiment.
Apple Inc. shares continuedfalling amid concerns over the impact of new tariffs on its China-based supply chain. Investors are worried about potential disruptions and increased costs affecting Apple's production and profitability.
NVIDIA Corporation. shares rebounded 3.5% during Monday's session as semiconductor and artificial intelligence stocks attempted to recover from recent tariff-induced selloffs, with analysts expressing confidence in the ongoing AI narrative.
Tesla Inc. shares dropped following a significant price target reduction by Wedbush Securities, lowering it from $550 to $315. This reflects concerns over Tesla's performance and outlook in light of escalating trade tensions.
UnitedHealth Group Incorporated. shares gained approximately 6% in extended trading, driven by the favorable adjustment in Medicare Advantage payments, signaling potential growth in the company's healthcare services.
Goldman Sachs Group Inc. shares fell after a downgrade to 'equal-weight' from 'overweight' by Morgan Stanley. The downgrade cites the bank's significant exposure to investment banking revenues amid rising recession risks and deteriorating market conditions.
Elevance Health Inc. shares added about 6% in after-hours trading, reflecting investor optimism following the announcement of increased Medicare Advantage payments, which are expected to enhance the company's earnings potential.
Nike Inc. shares continued declining due to apprehensions that key manufacturing partners in Vietnam, Cambodia, China, and Indonesia would face punitive tariffs. This raises concerns about supply chain disruptions and increased production costs.
CVS Health Corp. shares rose 7% in extended trading, also benefiting from the government's decision to increase Medicare Advantage payments, which is anticipated to positively impact the company's health insurance segment.
Humana Inc. shares surged 12% in after-hours trading after the Centers for Medicare & Medicaid Services announced a higher-than-expected increase in Medicare Advantage payments for the upcoming year, boosting investor confidence in the company's future revenue prospects.
Super Micro Computer Inc. shares jumped over 10%, leading gains in the S&P 500. The surge is attributed to the company's involvement in artificial intelligence technology, which is seen as a growth area despite broader market volatility.
Dollar Tree Inc. shares surged after Citi upgraded the stock to a 'buy' rating. Analysts believe Dollar Tree has the flexibility to raise prices in response to tariffs, potentially mitigating cost pressures and supporting profitability.
United States Steel Corporation shares rose following President Trump's announcement of a renewed review of its merger with Nippon Steel. This move is perceived as potentially favorable for U.S. Steel's strategic positioning.
Mesa Air Group Inc. shares soared over 50% following the announcement of its merger with Republic Airways in an all-stock deal. The newly combined entity will be renamed Republic Airways Holdings and is expected to benefit from increased economies of scale and a stronger financial position.
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