Why this Selloff feels different? 08/04/2025

HOT stories for today


 

US market wrap:
 

• The Dow Jones Industrial Average declined for a third consecutive session after President Donald Trump’s introduction of new tariffs, with the president warning of the possibility of even steeper duties on China by Monday. It was a highly volatile trading day, as investors attempted to gauge when the markets might stabilize amid the tariff-related uncertainty. The Dow experienced its largest intraday point fluctuation ever recorded. By the close, the Dow slipped 0.91%, the S&P 500 edged down 0.23%, while the Nasdaq Composite managed a modest gain of 0.10%.
• At one point, stocks staged a brief rebound, briefly pushing the Dow into positive territory. Rumors of a potential temporary suspension of tariffs circulated on social media, fueling the rally. However, the White House denied these claims, telling CNBC that any mention of a 90-day pause was "fake news." As a result, the major indexes reversed course and declined again. Later on Monday, Trump reaffirmed to reporters that there were no plans to halt the tariff strategy.

Why this Selloff feels different?

• Markets are no stranger to volatility, but the latest downturn has taken on a distinctly different tone. Here’s why this selloff stands apart: Despite sharp declines, corporate earnings forecasts have remained mostly unchanged — a sign that fear, not fundamentals, is driving the drop. U.S. equity futures have opened lower for several sessions in a row, echoing panic not seen since the 2008 Lehman collapse.
• Unusually, the U.S. dollar is falling alongside stocks, removing a typical safe haven. Meanwhile, passive investment flows and algorithmic strategies may be amplifying the volatility. And unlike past selloffs sparked by economic cracks, this one is largely policy-induced, with President Trump’s sudden tariff escalation acting as the trigger. As uncertainty deepens, investors are struggling to find a clear anchor in fundamentals, leaving sentiment to steer the market’s course. Without a coordinated policy response or a shift in tone from Washington, volatility may remain the dominant force in the near term.

 
Stocks on the move: 
      

• Health-care stocks — Shares of Humana [HUM], CVS Health [CVS], and UnitedHealth [UNH] rallied after The Wall Street Journal reported that the Trump administration plans to boost Medicare insurer payment rates next year by 5.06%, significantly above the 2.23% hike previously proposed by the Biden administration.
• Levi Strauss [LEVI] — The apparel stock gained over 1% after the company released its first-quarter earnings. Adjusted earnings came in at 38 cents per share, reflecting a 52% increase year-over-year, while revenue rose 3% to $1.53 billion.
• Broadcom [AVGO] — The chipmaker’s shares advanced more than 2% after announcing a new $10 billion share buyback program, effective through December 31.
• On a rare up note, CASI Pharmaceuticals (CASI +1%) spiked as much as 5% before paring gains, after disclosing a $20 million buyout proposal for its China-based operations.
   

Today’s action

• Asia-Pacific markets advanced on Tuesday, bouncing back from losses in the previous session triggered by U.S. President Donald Trump’s tariff actions and threats of even steeper duties on Chinese goods. Japan’s Nikkei 225 surged 5.31%, while Hong Kong’s Hang Seng Index increased 1.58%, and the Hang Seng Tech Index soared 3.57%. On Monday, Hong Kong’s equity market had led regional declines, with the Hang Seng Index tumbling more than 13%, marking its sharpest single-day drop since 1997, according to FactSet data.
• Trump intensified trade tensions on Monday, warning of an additional 50% tariff on Chinese imports if Beijing failed to reduce its levies on U.S. goods. U.S. stock futures climbed Monday evening, following the S&P 500’s third consecutive day of losses after the tariff announcement. Futures linked to the S&P 500 rose 0.9%, while Nasdaq-100 futures gained around 1%. Dow futures jumped 444 points, representing an increase of nearly 1.2%. On the economic calendar Tuesday, the National Federation of Independent Business is scheduled to release its March small business sentiment index, while later in the week, investors will be watching for the upcoming consumer price index (CPI) report.

Watchlist: CVS, HUM, MRNA, LEVI, AVGO, COIN, NVDA, TSLA, META

Bitcoin

• Bitcoin fell to $74,436 on Monday, its lowest since November, before recovering to around $79,000—still down nearly 28% from its January peak of $109,225. Analysts warn the crypto could slip below key support at $73,745.
• Despite briefly outperforming stocks after Trump’s tariff announcements, Bitcoin is struggling to hold ground amid high market volatility. Weekly trading volume has also dropped sharply to $91 billion, more than 45% below November’s average, as many traders retreat to the sidelines.
  Watchlist: Bitcoin: 74 000-100 000, Ethereum:1500-2600, Solana: 80-150
   

Forex
 

• The Japanese Yen bounced back slightly Tuesday, attracting dip-buyers after overnight losses. BoJ rate hike expectations and global recession fears fueled safe-haven flows, while a weaker U.S. Dollar—pressured by dovish Fed expectations—also supported the JPY. Still, mild optimism in risk sentiment and concerns over U.S. tariffs on Japan limit the yen's upside for now. 
• The euro snapped a two-day losing streak, climbing back to around 1.0975 during the Asian session as USD selling resumed. The move was backed by a bullish technical setup, keeping near-term upside potential intact—though a decisive drop below the 200-hour EMA would challenge this positive outlook.
  Watchlist: EUR/USD: 1.0700-1.0950, USD/JPY: 148-150
   

Basic Materials

• Gold (XAU/USD) regained ground in early Asian trading Tuesday, rebounding from a three-day slide near the $2,956 zone. Renewed fears of a global trade war, sparked by President Trump’s tariff escalation, revived safe-haven appetite. Expectations of aggressive Fed rate cuts also weighed on the dollar, lending support to bullion. However, improved risk sentiment may limit further upside for now.
• WTI crude oil rose over 1% to just below the mid-$61s after volatile moves on Monday. USD weakness supported the rebound in dollar-priced commodities. Still, worries that U.S. tariffs could spark a global recession and weaken fuel demand, along with a surprise OPEC+ supply increase, could temper bullish momentum.
  Watchlist: GOLD 2600-3100, US Oil: 59.00-79.00

Key Economic Events Today:

EST time
06:00 am: USD NFIB Small Business Index
02:00 pm: USD FOMC Member Daly Speaks

Earnings

BMO (Before the US Market opens)
RPM            RPM Intern. Inc.
WDFC         WD-40 Company
TLRY           Tilary Brands
AMC (After the US Market closes): CALM, KRUS, AEHR

The TEFS Analyst team wishes you a successful day!