"Can't believe it," "can't catch my breath," "dare not bottom-fish," "don't know how to write the report".... Faced with tariffs, the US stock market is confused

Overnight, the major U.S. stock indices recorded their largest single-day drop in over two years, and the dollar fell to its lowest point in 2025. Investors flocked to government bonds for safety, while gold, typically seen as a safe-haven asset, also experienced a decline.

In the face of the "unprecedented shock" caused by Trump's tariff plan, fund managers, brokers, and bankers on Wall Street are troubled and extremely uneasy.

According to a report by The Wall Street Journal on the 3rd, 60-year-old hedge fund manager Rob Citrone expressed that he "couldn't believe" what he was seeing: the market initially rose during Trump's speech, although Citrone had increased his bets against the stock market at that time, the plan ultimately announced by the president was broader and more aggressive than most investors had anticipated, triggering a market crash.

Stephen Solaka, managing partner of Belmont Capital Group, stated that he had "never seen such a macro environment." Many clients are showing anxiety that they haven't experienced in years, and their confidence in the market's recovery from each sell-off is wavering. They are no longer eager to buy technology stocks on dips but are instead "seeking to de-risk."

Difficulty in digesting tariff impacts, market sell-off intensifies

According to data from the cryptocurrency prediction market Polymarket, within less than an hour after Trump's speech ended, traders raised the probability of an economic recession this year from 38% to 48%. Investors are struggling to find the right words to describe what might happen next and how to manage their funds.

As the market decline continues, some are beginning to worry that the sell-off could trigger more selling. In recent years, automated trading strategies have played an increasingly important role in the market. These programs rely on preset algorithms and models rather than intuition and instinct, often becoming active when the market becomes more turbulent.

Arnab Sen stated that these programs can amplify sell-offs:

"It's like a delayed reaction; they are not the trigger, but if this shock persists, they will exacerbate the chaos."

Data from Cboe Global Markets shows that the ratio of options contracts designed to hedge against significant market declines to those betting on stock price increases has surged to its highest level since August 5, when the Nikkei 225 index fell more than 12%, marking the worst single-day drop since the "Black Monday" crash, shocking global investors.

Lou Brien of DRW Trading Group remarked that Thursday's market drop "was the fastest I've ever seen," but investors need time to fully digest the implications of Trump's tariffs:

"It's a process, not an event."

Investors "gasping for air"

Danny Kirsch, head of options at Piper Sandler, stated that his team experienced "one of the busiest nights in his memory," still conducting bearish trades for clients until 10 PM on Wednesday night During 2020, the U.S. government quickly took action to stimulate the economy, helping the stock market rebound rapidly. But this time, the government is the "culprit" of the sell-off, not the solution. Former U.S. Treasury Secretary Larry Summers wrote on social media platform X:

“The president's remarks caused so many people to lose so much in just one hour.”

Dan Ives of Wedbush Securities compared Trump's speech to the situation in March 2020, stating, “The initial reaction is worse than the worst-case scenario. This will be a panic moment. I can hardly breathe.”

Callie Cox, chief market strategist at Ritholtz Wealth Management, noted that investors have become accustomed to such "dramatic" statements, but now “investors have been forced to accept” it.

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