The Dow is down 1,600 points today, or roughly 4%. The NASDAQ 100 is seeing a 6% drop. The S&P 500 is down roughly 5% - a loss of more than $2 trillion. What does this all mean? The stock market is NOT doing well.
USC MBA candidate Eddie Jones tried to avoid checking his trading portfolio this morning.
“I’ve been purposefully not looking at it because I’m trying to maintain some sanity,” said Jones.
This drop comes after President Trump rolled out partial reciprocal tariffs on foreign imports yesterday. Trump dubbed it “Liberation Day.” The tariffs are directed at encouraging domestic manufacturing, breaking down foreign trade barriers, and eventually lowering prices for consumers.
“This will indeed be the golden age of America. It’s coming back. We’re going to come back very strongly,” Trump said on Wednesday at the “Make America Wealthy Again” event.
Not everyone seems to agree. Professor Larry Harris holds the Fred V. Keenan chair in finance at the USC Marshall School of Business and finds fault in Trump’s plans.
“The most credible story for why prices might decrease is that the effect of the tariffs is so draconian that it so lowers the wealth of the country that the decrease in demand causes prices to decrease,” said Harris. “So we can get lower prices if everybody’s substantially poorer than they are now. That doesn’t make any sense. They wouldn’t be any better off with lower prices, because they wouldn’t have any money.”
Ben Cahn co-hosts a finance podcast called “The Ben and Emil Show,” and believes the percentage changes are significant.
“To have it be down, I mean, it closed down on the day 4.93% on the S&P 500. That’s a big drop,” said Cahn.
Cahn just had his worst day in trading history. His strategy for the coming weeks is to take it day by day and consider how the trading landscape is changing.
“Warren Buffett famously says, ‘Never bet against America.’ My big question is, will that old adage of never bet against America die with him, because what we’re seeing currently is so unprecedented,” Cahn said.
He worries that in the long run, these moves will cost the U.S. economy dearly.
“America and Trump think that we hold all the cards. But since we don’t do so much manufacturing here, since we are a services economy, since we are an entertainment economy, we’re really not in [the] position to call the shots as we might think,” Cahn said.
Cahn is unsure how long it will take to bounce back from these drops or how international trade will be affected. He believes it is a waiting game as to what Trump does next.
“There’s definitely room for disruption from other countries banding together and saying you’re not going to bully us like this, and I don’t know if we’re capable of coming back from that. Who knows how long this will take to recover from,” Cahn said.