Answering your stock market questions: What to know about Wall Street trading as Trump sticks with tariffs

Stocks fluctuated wildly Monday, sending U.S. investors on a tumultuous ride. But by the market close, the major indexes returned to near where they ended the previous week when President Donald Trump announced far-reaching tariffs on imported goods. 

The major indexes tracking the market fell sharply at the opening Monday morning, briefly recovered but then two of the leading indexes continued their descent in afternoon trading. 

The Dow Jones Industrial Average dropped about 0.9%, or about 349 points, to 37,965.60. The S&P 500 fell 0.2%, or nearly 12 points, to 5062.25. The tech-heavy Nasdaq rose 0.1%, about 15 points, to finish at 15,603.26.

The intraday moves were more extreme. The Dow had been down more than 1,700 points at its low point, or 4.4%. The S&P 500 recovered after sinking 4.7% at one point. 

Meanwhile, the Nasdaq had surged as much as 4.5% at its high on Monday and plummeted as much as 5.2% at its low point. 

Melville financial adviser David Frisch said he felt as if he had already watched a full week's worth of market swings by 11 a.m. 

"It has been one of the most unbelievable days I've ever seen in 35 years," Frisch, CEO of Frisch Financial Group, said on Monday afternoon. 

As Long Islanders weather the latest stock market turmoil and its effect on their retirement savings, Newsday has answers to key questions.

Why did stocks briefly surge Monday?

At one point, around 10:15 a.m., stocks briefly rallied, reversing early morning losses. Around that time, there was speculation online suggesting Trump was considering a 90-day pause for tariffs, but the White House told CNBC there was no truth to the speculation. 

There was little clarity on the origin of the rumor late Monday but it appeared to have resulted from a misinterpretation of comments from Kevin Hassett, director of the White House National Economic Council, during a Fox News interview, the Associated Press reported. 

What do Long Island investors with 401(k) retirement savings in stocks need to know?

If you have a long-term investment strategy, a selloff is a bad time to deviate from your plan, said Greg McBride, chief financial analyst at personal finance website Bankrate. 

"Resist the urge for the knee jerk reaction of selling," McBride said. "Don't let short-term volatility distract you from your longer-term objectives."

McBride cited research from J.P. Morgan Asset Management that found missing 10 of the best days for the market in a 20-year period from 2004 to 2023 would have cut a person's return in half. 

"The best days often come on the heels of the worst days," he said. 

What can people do if they want to take action without buying or selling?

Long Islanders concerned about their retirement savings can review their portfolios to better understand how they're invested, Frisch said. 

He agreed a selloff can be a bad time to make changes but said investors should understand how much of their savings is invested in stocks compared with lower-risk investments, such as cash and bonds. 

"Days like this make it very difficult to think about the recovery because all people want to avoid is losing more," Frisch said. "You can't be driven to change your overall strategy simply because you're watching the news day in and day out."

What does this mean for Long Island businesses?

The Trump administration's tariff policies and the subsequent stock sell-off have led to uncertainty for leaders from the largest public companies to small businesses, McBride said.

"Business confidence has plummeted because of the air of uncertainty," McBride said. "When businesses face uncertainty, they don't take risks. They don't go out and hire a bunch of people. They don't expand production. They sit back and wait for the dust to settle."

Steven Kent, chief economist of the Long Island Association and a Molloy University professor, said his greatest concern is how changes in stock market values could hurt consumer spending. 

What is a bear market?

A bear market occurs when one of the broad market indexes that track many companies’ share prices drops by at least 20% from their recent highs over a sustained period of time, according to the U.S. Securities and Exchange Commission. A correction is a drop of at least 10%. 

As of Monday's market close, only the Nasdaq was down more than 20% from its peak. The index was down 22.8% from its recent high in February.

The S&P 500 finished Monday down 17.6% from its recent high in February, while the Dow was down 15.8% from its high point in December. 

What are the major stock indexes and what do they track?

The S&P 500 is a broad stock market index that includes large U.S. companies across industries and represents about 80% of the market capitalization, or value, of U.S. public companies.

The Dow Jones Industrial Average is a price-weighted measure of 30 of the largest U.S. companies that covers all industries except transportation and utilities, according to S&P Dow Jones Indices, which operates the measures.

The Nasdaq composite tracks more than 3,000 stocks listed on the Nasdaq stock market, and has a heavier emphasis on technology-related companies. The companies that carried the largest weight in the index as of March 31 were Apple, Microsoft and Nvidia, according to Nasdaq. 

What is a circuit breaker?

In the financial markets, a circuit breaker is an emergency measure utilized by stock exchanges to temporarily stop trading if the market or a particular security drops below a certain percentage. All major U.S. stock exchanges abide by these trading halts.

While U.S. markets have not triggered a circuit breaker since Trump’s tariffs went into effect, the markets in Japan and Taiwan were briefly halted for about 5 to 10 minutes apiece on Monday morning because of panic selling. Circuit breakers in the United States were last triggered on four separate dates in March 2020.

What is a recession?

A recession is a significant decline in economic activity that lasts more than a few months, according to the National Bureau of Economic Research.

The drop in economic activity must be widespread across industries. Economists use indicators, such as job creation, consumer spending and industrial production, to assess the state of the economy.

In March, the U.S. economy created 228,000 jobs, according to the U.S. Bureau of Labor Statistics. That was stronger than the 140,000 jobs economists expected, according to a Bloomberg survey, and was a sign of the economy's strength.

Will the U.S. economy enter a recession?

A rising number of economists think so. A survey of economists in late March conducted by consumer finance website Bankrate found 36% expect the U.S. economy to enter a recession by March 2026. That was up from 26% in December.

Still, economists have been overly pessimistic before. In September 2022, two-thirds of economists surveyed predicted a recession over the following year.

The U.S. experienced a recession from February 2020 to April 2020, as the COVID-19 pandemic forced businesses to close and led to widespread job losses.

Before that, the U.S. economy faced a major recession for 18 months from December 2007 to June 2009, followed by a gradual economic recovery.

What is Black Monday?

On Oct. 19, 1987, the Dow Jones Industrial Average fell 22.6%, the largest single-day drop on a percentage basis in the index’s history.

It eclipsed the largest single-session drop in 1929. The second-largest percentage drop in the Dow occurred on March 16, 2020, as businesses began to close and investors' fears grew that the COVID-19 pandemic would sink the United States into a recession.

With Robert Brodsky and AP

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.