US Equities, Cryptocurrencies Reverse Gains Amid Tariff Uncertainty, S&P 500 Down 2%, Nasdaq 1%

US equities and cryptocurrencies experienced a reversal of early gains on Tuesday afternoon, as optimism surrounding international tariff negotiations waned. The S&P 500 and Nasdaq Composite, which had initially surged by more than 4% each at the start of the trading session, ended the day approximately 2% and 1% lower, respectively.

Bitcoin and ether also saw significant declines, trading 4% and 6% lower by 4 pm ET. Bitcoin, which had briefly shown resilience against the broader market selloff, was down more than 12% since President Trump’s “Liberation Day” announcement.

The initial rebound in stocks was driven by hopes that President Trump might reconsider the aggressive global tariffs announced last week. Treasury Secretary Scott Bessent had earlier suggested during a morning appearance that there might be “some good deals” on the table. However, these hopes were dashed when Trump confirmed that tariffs as high as 104% on Chinese imports would go into effect at midnight, unless Beijing reversed its retaliatory tariffs on the US.

Investors have been grappling with mixed signals from the Trump administration regarding the permanence of the tariffs and the likelihood of reaching any deals with foreign nations. Commerce Secretary Howard Lutnick had previously stated that there would be no postponement of the new tariffs, even as the administration extended the deadline for previously announced levies.

Adding to the confusion, White House senior counselor for trade and manufacturing, Peter Navarro, had stated that the tariffs were not part of a negotiation. Later that day, Trump indicated that he was open to discussions with other countries, mentioning that he had already had several calls.

US trade representative Jamieson Greer confirmed to the Senate Finance Committee that nearly 50 countries had reached out to discuss reciprocity. However, hopes for a deal with China remained slim.

Investors are also focusing on key inflation data this week, with the Consumer and Producer Price Indexes set to be released on Thursday and Friday, respectively. The odds of the Federal Reserve abandoning their current pause and cutting interest rates in May rose to 51% on Tuesday, up from 19% a week ago.