US stocks extend fall as WSJ report rekindles tariff fears

It’s an increasingly-rough day in the US stock market as the optimism from Friday/Monday is eroded. A hint came late yesterday as stocks slumped into the close and now the pain is extending. The S&P 500 is down 1.1% and the Nasdaq down 1.9%.

Leading the way lower are the Mag7 stocks, with Tesla lagging and down 6%. There is some rotation going on as those crowded stocks were all losers yesterday even as the index put up strong gains.

On the macro side, the latest WSJ report on tariffs highlights some big problems:

• VAT taxes will be ‘taken into account’ in setting tariff rates
• The US considered (then dropped) a three-tier system of tariffs that didn’t include any ‘no tariff’ regions
• Officials are worried the USTR can’t handle all the bureaucracy around tariffs
• Officials are worried about legal challenges
• Canadian officials were told tariffs were ‘virtually certain’
• In additional to reciprocal tariffs, there will be 25% tariffs on autos, pharma and computer chips among others

The whole thing sounds like a trainwreck waiting to happen. Now maybe this is being floated so we get some ‘good news’ when it’s actually announced but these issues are really hard to resolve.

This article was written by Adam Button at www.forexlive.com.