For the second time in two weeks, the market success forced Trump to "plead guilty"? After a big drop, a big rise, and traders are "unsuccessful"

Source: Wall Street Insights

Trump's erratic tariff policies have left investors suffering in the "roller coaster" market conditions.

On Tuesday, Trump said he had no intention of firing Powell. According to Chinanews.com, Trump said on Wednesday that he would "significantly reduce" the high tariffs on China. During Wednesday's trading session, market sentiment took a sudden turn for the better. Both US stocks and the US dollar rose, while the yields on US Treasuries and the price of gold declined.

In addition, US Treasury Secretary Bessent also mentioned on Wednesday the opportunity for the two major economies to reach a "major" trade agreement. However, it may take two to three years for the two sides to reach a comprehensive trade agreement, and Trump will not unilaterally reduce tariffs, causing US stocks to give back more than half of their gains.

A senior trader jokingly reviewed the chaotic situation at the start of the day:

"As soon as Trump spoke, the stock market soared;

The Wall Street Journal repeated Trump's remarks, and the stock market soared further;

Reuters downplayed the content reported by the Wall Street Journal, and the stock market fell and then rebounded;

Finally, Trump went back to the starting point, and the market no longer cared."

Market volatility may continue

The news about tariffs continues to tug at the nerves of the market, and this kind of "roller coaster" market movement is not the first time it has occurred.

Just two weeks ago, according to a report in the Shanghai Securities News, Trump announced a 90-day tariff suspension on some countries, during which the tariffs were significantly reduced to 10%. The market responded with a sharp rise, and the S&P 500 recorded its largest gain since 2008.

In the face of so much uncertainty, the only certainty is that volatility will continue to exist.

According to data compiled by the media, the S&P 500 index has had a daily gain or loss of more than 1% on 7 out of the past 10 trading days, and April is likely to be the most volatile month since the pandemic in 2020.

According to a report released by Citibank on Monday, options traders generally bet that the S&P 500 index will experience a daily volatility of 1% or higher in every trading day at least until May 23.

Are "news headlines" dictating the market's direction?

It seems that every pulse of the market closely follows every word coming out of Washington.

Some media analysis points out that whether it is a sharp rise or a sharp fall, all price changes are now driven by the policies of the White House, and these policies are often "unpredictable".

This makes the market react violently to any minor news about the progress of tariffs. As Chris Hentemann, Chief Investment Officer of 400 Capital Management, said:

"People are constantly on guard for the next news headline."

"Whether the result is a sharp rise or a sharp fall, it will limit people's ability to invest their funds."

Marko Papic, Chief Strategist at BCA Research, also bluntly stated:

"The market is trading entirely based on policies. In other words, it's following the tweets."

Traders are frustrated

Facing such an unpredictable market environment, traders are generally feeling exhausted.

Jay Woods, Chief Global Strategist at Freedom Capital Markets, said:

"This is so frustrating. Every day is full of uncertainty, uncertainty, uncertainty. We expect one thing to happen, and then something else occurs."

This deep sense of powerlessness stems from the fact that the market trend has lost its fundamental logic. The uncertainty of policies has disrupted traditional market signals, making it almost an impossible task to predict the next move of stocks, bonds, or the US dollar.

Keith Lerner, Co-Chief Investment Officer at Truist Advisory Services, believes that despite the two consecutive days of rebounds, market sentiment has not really improved. The stock market has only returned to the position it was in before the news of "Powell possibly being fired" came out last week, and the high level of uncertainty pervading the market has not dissipated.

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