Stocks return to red

Investor angst over Donald Trump’s tariffs enveloped every corner of Wall Street as US-China trade tensions escalated again Thursday, sparking a new slide in stocks, bonds, the dollar and oil, with liquidations in US assets pointing to disorder in the financial system.

A day after dip buyers flocked to markets in the wake of the president’s partial retreat, assets tied to the economic cycle sank again, with Trump’s attempt at mollifying Wall Street providing little relief. Investors are rushing to game out how the effective freezing of Chinese trade will impact companies and growth. The S&P 500 fell about 3% while the dollar headed toward its lowest point since October. A solid US sale of 30-year Treasuries failed to ignite a rally, but did signal an appetite for bonds amid intense volatility.

Yesterday’s sigh of relief on Trump’s flip on tariffs flopped back to fear today as concern grows that further escalation of the trade war between the two biggest economies, as happened today, will bring lasting damage to global growth. For those keeping score, America’s tax on Chinese goods is now 145%. —Jordan Parker Erb

What You Need to Know Today

Bridgewater Associates’ billionaire founder Ray Dalio said investors have been left with “an element of trauma or shock or fear” after all the global markets turmoil this week. “It dramatically affected psychology and attitude about the United States’ reliability,” he said in an interview with Bloomberg Television. “It could have been handled better.” In his view, it’s worth watching the weakening dollar and how the 30-year Treasury trades versus the 10-year bond for any evidence that investors are turning away from what have long been the world’s safest assets. So what does all of this mean for you?With fears of a downturn growing, experts offered their best advice for “recession-proofing” your portfolio: Avoid knee-jerk reactions, hang on to the assets you like and consider adding gold. Here’s where to start.

In a small glimmer of hope for consumers, US inflation cooled broadly in March, indicating some relief amid the ongoing tariff tit-for-tat. The consumer price index, excluding often volatile food and energy costs, increased 0.1% from February, the least in nine months, according to data from the Bureau of Labor Statistics released Thursday. The overall CPI declined 0.1% from a month earlier, the first decrease in nearly five years. The inflation slowdown reflected a decline in energy costs, used vehicles, hotel stays and airfares. The cost of motor vehicle insurance—a main source of inflation in recent years—also retreated. Here are five key takeaways from the US CPI inflation report for March.

Presidential insider trading? Senators are calling for an investigation following Trump’s social media posts ahead of yesterday’s tariff walk-back. In a social media post yesterday, Trump said it was a “great time to buy” just four hours before announcing the 90-day tariff pause. The message’s timing has some Democratic lawmakers questioning whether Trump was already mulling the pause when he made the post, the Associated Press reported. On Thursday, Senators Adam Schiff and Ruben Gallego published a letter inquiring whether the president, his family or members of the administration engaged in insider trading ahead of the tariff U-turn.

House Republicans approved by only two votes a Senate-passed budget outline that could eventually add trillions of dollars to the US national debt. The 216-214 vote Thursday on the budget—which clarifies the parameters for the tax cut and debt ceiling increase—was delayed a day so Trump and Republican congressional leaders could assuage a dissident group of GOP spending hawks pressing for deeper cuts in safety-net programs like Medicaid and food assistance. With the budget approved, the way is open for a follow-on package to cut taxes by up to $5.3 trillion over a decade and raise the debt ceiling by $5 trillion, in exchange for $4 billion in spending cuts. Part of that would involve renewing 2017 GOP tax cuts that went mostly to corporations and the rich, a move Senate Republicans are hoping a mathematical gimmick will say costs nothing. Despite controlling both houses of Congress by the slimmest of margins, the GOP can now push through Trump’s agenda solely on their own votes—bypassing the need for negotiations with Democrats.

Israel now controls more of Gaza than at any point during the war. The country’s advance is part of a plan that officials increasingly describe as leading to a full military occupation. Taking control of the Palestinian enclave for the first time in two decades would be a high-stakes gamble—it would risk increasing the death toll in Gaza, already reported by the Hamas-run health ministry to exceed 50,000, while siphoning more reserve soldiers away from an economy stifled by war.

Prada agreed to buy Versace for about $1.38 billion in cash, strengthening its position as Italy’s largest fashion group by adding one of the luxury industry’s best-known brands. The purchase, the largest in Prada’s 112-year history, returns Versace to Italian ownership and could put the company in a better position to compete with bigger luxury rivals such as LVMH and Kering SA. Capri, the fashion house’s current owner, is selling Versace at a $700 million loss after attempting to lean into “quiet luxury.”

What You’ll Need to Know Tomorrow

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