The S&P 500 rose 2%, recovering from Monday's 2.4% drop. Photo / Bloomberg
The S&P 500 rose 2%, recovering from Monday's 2.4% drop. Photo / Bloomberg
Stocks recovered on Tuesday from a steep sell-off the day before, but global investors also rushed into gold, as concerns continue to mount about President Donald Trump’s trade war and his deepening anger at the Federal Reserve chair.
The S&P 500 rose about 2%, reversing its losses from Monday, whenthe index fell 2.4%. Monday’s sell-off had accelerated after Trump targeted Jerome Powell, the Fed chair, in a social media post, urging him to cut interest rates and suggesting that an economic slowdown would be his fault.
Gold, which on Tuesday briefly rose above US$3500 ($5870) an ounce for the first time, has set a series of records in recent weeks, during a largely ugly stretch for the markets. Investors often see gold as a haven during times of turmoil, and its price has surged more than 30% since the start of the year.
“Gold has again moved to yet another record, with its safe-haven reputation shining bright,” analysts at RBC Capital Markets said. “With the uncertainty related to Fed independence, gold continues to benefit as a safe-haven, and one not tied to the US dollar.”
Gold has been soaring since early April when investors, alarmed by Trump’s tariffs, starting selling Treasury bonds. On Tuesday, the spot price of a troy ounce of gold briefly reached above US$3500 before slipping lower.
Major US stock indexes rebounded, with all sectors gaining and the technology-heavy Nasdaq jumping more than 2%.
The dollar, which slumped on Monday against a range of currencies, was having another turbulent day, losing ground to the yen but recovering against the euro. The dollar has fallen against the British pound for 10 days in a row; an 11th on Tuesday would be the longest streak since at least 1971, according to Bloomberg.
The yield on 10-year Treasury bonds fell slightly, to 4.38%.
The Trump administration’s whiplash on trade policy continues to drive volatility in the markets and weigh on companies. “The level of uncertainty is too high. It’s not productive,” David Solomon, chief executive of Goldman Sachs, said in a CNBC interview Tuesday. “It’s affecting investment spending and planning, and that will have an effect on growth in the economy.”
