The S&P 500 lost 1.04% yesterday as the VIX “fear index” for volatility spiked 10%, but futures were up 0.16% this morning, suggesting traders may be putting a temporary pause on the panic selling that has gripped markets over the past 24 hours.
That panic came from two sources, one real and one fictitious:
- The real source was the U.S. Supreme Court’s ruling that President Trump’s “Liberation Day” tariffs are illegal, temporarily reducing the U.S. trade tariff rate to zero, and Trump’s chaotic reaction to it. Trump immediately insisted he would impose a global rate of 10%, then hours later said it would be 15%, and then shortly after that the White House said it would be 10%, possibly followed by 15% at some point in the future. In the past 24 hours, Trump has also vowed “terrible” things to come in trade policy, which he believes he can impose “in a much more powerful and obnoxious way.”
- The fictitious source was the Citrini Research post on Substack, which imagined a future in 2028 in which AI destroys so many jobs that it sends the economy into a doom spiral. Software stocks declined 3.82% yesterday, in large part because of the fear, uncertainty, and doubt in the note. “The declines included IBM [down 13.15%], posting its worst day since the 2000 tech bubble burst,” Jim Reid and his team at Deutsche Bank told clients this morning.
