Is Something About To Blow Up In The Credit Markets?

The S&P 500 is now down almost 19%. It closed at 4982.77 (chart). If it falls another 1.35% down to 4915.32, it will be in a bear market. The index was up sharply at the start of trading today, but closed down 1.6% during regular trading hours after the magnitude and imminence of the Trump administration’s tariffs on US imports hit home. After midnight tonight, the US is slapping a 104% tariff on imports from China. S&P 500 companies have lost $5.8 trillion in stock market value since Trump's tariff announcement last Wednesday, the deepest four-day loss since the benchmark was created in the 1950s. Tomorrow, the drop could make the history books as the second fastest bear market since the Covid selloff.

Trump administration officials have claimed that the plunge in stock prices caused by their tariffs only really hurts the wealthy. That's not true given that 62% of Americans have money invested in the stock market (chart). At the barber shop I went to on Sunday, everyone was complaining about how much money they lost recently in the stock market, including the barber. The guy who turned on my sprinkler system this afternoon was following the market on his cell phone and getting upset that the morning's rally fizzled.