Markets whipsawed on Tuesday, as investors puzzled through President Trump’s commitment to tariffs, with stocks dropping in early trading before recovering late in the day.
The S&P 500 index fell 1.5 percent at its low point before recovering some ground and ending the day 0.8 percent lower. Recent waves of selling have left the S&P 500 nearly 10 percent below its mid-February record. Falling more than 10 percent would signify a symbolic milestone known on Wall Street as a correction.
Tuesday’s stock swoon followed Mr. Trump’s new threats of steep tariffs against Canada, with markets moderating hours later after a Canadian official said a delegation would head to Washington soon to lower the tension between the two countries.
The tech-heavy Nasdaq Composite index wavered between gains and losses, closing 0.2 percent lower after a 4 percent drop on Monday. The Nasdaq is already in correction.
Investors are struggling to understand the administration’s messaging on tariffs. Having previously thought Mr. Trump’s more extreme tariff threats were mostly a negotiating tool, investors are starting to worry that they may have been too blasé about the risks inherent in his strategy.
“Over the coming weeks, we expect further volatility and potential weakness in equity markets,” analysts at the Swiss bank UBS noted on Tuesday.