- The retail investing crowd is freaking over over Trump's latest tariffs.
- US stocks sank after the president imposed new duties on US imports, including reciprocal tariffs.
- Traders took to the internet to lament their losses and speculated a bear market was underway.
There's no way to sugarcoat it. Retail traders online are in full-blown panic mode over the trade war.
Everyday investors took to social media on Thursday to commiserate over the impact of the president's latest tariffs, which tanked stocks on Thursday.
By 11:00 a.m. ET, the rout had deepened, with the S&P 500 down more than 4%, the Dow falling over 1,500 points, and the Nasdaq 100 falling over 5%. Bond yields also sank as investors flocked towards safe-haven assets, with the 10-year US Treasury yield declining as much as 18 basis points to its lowest level since October.
Individual investors were caught off guard by the sweeping nature of the latest duties, which included a base 10% tariff on all US imports, with tariffs on goods from China rising to 54%. Trump whipped out a presentation board during the Wednesday address in the White House Rose Garden to show the scope of the tariffs, which impact dozens of US trading partners.
"You know your calls are cooked when the board comes out," one user on r/WallStreetBets, the popular retail trading subreddit that exploded in popularity during the pandemic, wrote on Wednesday.
Other users lamented large losses in their portfolios since the market began to slide late Wednesday.
One user said he was "officially bankrupt" after purchasing calls on Nike prior to the tariffs announcement. Nike stock dropped 12% by mid-day Thursday as multinational brands with global supply chains were particularly hard hit.
"I'm never going to buy options again, all my gains and now I wasted 5 years of savings," the user said.
Retail trader sentiment has soured since Trump's second term began.
While markets initially rejoiced at Trump's return to the White House, reality quickly set in as he pursued a much wider trade war than initially expected.
In recent months, excitement about the president's pro-growth measures has been crushed by trade war fears and the potential impact on inflation and economic growth.
One Reddit user speculated that the damage to stocks could run on and potentially create a bear market, which is defined by stocks falling 20% from their peak.
BRENDAN SMIALOWSKI/AFP via Getty Images
"Today 30 years of globalization have ended. I think there will be consequences," the user said, speculating that high inflation and job losses could lead to a "relatively long" down period for stocks.
"The process of negotiating with dozens and dozens of countries simply won't happen fast. Maybe it's time to get out for an extended period of time???" they later added.
"I have a feeling this might be one of the biggest bear traps ever tomorrow and a lot of people are going to get liquidated to hell," another user said, speculating that the decline in stocks could be on par with what was seen during the 2008 recession.
The American Association of Individual Investors' most recent survey shows 61.9% of investors are bearish on the stock market over the next six months. That's about double the historical average, and nearly three times the number of investors who felt bullish about the market, which stood at 21.8%.
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