Wall Street Awoke to a New Fear as Markets Crushed and Soared

When the genuine post from Donald Trump finally appeared—marking a sharp turn from earlier hoaxes—and the S&P 500 shot up 7% in just eight minutes on Wednesday, Ed Al-Hussainy, a strategist at Columbia Threadneedle, decided it was time to step away from his desk in Manhattan.

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With algorithmic trading flooding the markets with rapid buy orders, he knew there was little a human could do. So, he walked to the nearest Walgreens, picked up an 18-pack of Modelo beer—Mexico’s well-known export—and returned to hand them out to his coworkers. “For us,” he said, “it felt strangely peaceful.”

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That calm didn’t last long. By Thursday morning, Al-Hussainy was back in front of his screens, watching stock prices tumble again and, more alarmingly, Treasury yields spike—even after Trump suggested that the dramatic rise in yields was what prompted him to announce a temporary 90-day delay on new tariffs.

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The bond market was clearly under strain, and many feared the situation wouldn’t stabilize without intervention from either the Treasury Department or the Federal Reserve.

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“I’m not worried about a recession,” Al-Hussainy said. “What concerns me is the potential for a financial crisis.”

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At first glance, the broader market appeared strong over the past week. The S&P 500 climbed over 5%, Treasury yields ended around where they were in February, passive investors poured more money into funds, and even Bitcoin ended the week on a high note.

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But this surface-level strength masked a deeper shift in investor sentiment. Analysts, traders, and fund managers have begun to question the once-unshakeable appeal of American financial assets—assets that were long considered the safest bets in the global markets.

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Some trading behavior even started to resemble patterns more typical of emerging markets. The underlying concern: Trump’s aggressive and unpredictable trade strategies might be putting America’s long-standing position as a global financial anchor at risk.

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Charlie McElligott, a managing director at Nomura Securities, described the chaos in vivid terms. “Sometimes, you think your charts are broken because prices are moving so fast. Desks are constantly lighting up with alerts—risk thresholds, trade notifications—it’s sensory overload, nonstop dopamine spikes.”

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The past week was one of the most turbulent on Wall Street in recent memory. On Monday, a fake social media post triggered the biggest single-day stock rally since 2020, only to be undone shortly after.

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By Tuesday, markets reversed course, with the S&P 500 teetering near bear-market territory following a White House statement indicating tariffs on Chinese goods could rise as high as 104%. This sent long-dated Treasury yields soaring, as some hedge funds were reportedly forced to unwind long-held trades designed for market stability.

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Then came Wednesday’s real Trump post, which sparked a record-breaking equity rally. Roughly 30 billion shares were traded across U.S. exchanges that day—the highest ever in a single session. While this surge initially seemed like a return to normal, bonds continued to fall. That pattern didn’t let up.

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Matt Miskin of Manulife John Hancock Investments summed up the mood, saying every day now feels like the “Sunday scaries.” He was in the middle of delivering a market outlook to 300 clients when Trump’s tweet sent markets into overdrive, instantly throwing months of strategy into uncertainty. “Volatility like this kills liquidity,” Miskin noted, adding that it often forces large investors to dump positions just to stop the bleeding.

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Meanwhile, at Tudor Investment Corp., bond trader Alexander Phillips reportedly lost around $140 million in April due to the chaos triggered by tariff-related headlines. Though he remains with the firm, which oversees $16 billion, the loss underscores how dangerous this environment has become—even for seasoned professionals.

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The traditionally safe U.S. bond and currency markets are now showing signs of fragility. “We have to entertain the idea that fixed income markets could be undergoing a fundamental disruption,” said Phillip Toews, CEO of Toews Asset Management. “The headlines and the market reactions are jaw-dropping.”

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Boston Fed President Susan Collins tried to offer some reassurance, stating on Friday that the central bank stood ready to act if markets grew too unstable. She noted that, for now, markets were functioning and liquidity concerns hadn’t materialized.

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Still, the flow of capital tells a more complex story. Treasury funds attracted a record $18.8 billion in inflows through Wednesday, according to EPFR Global. But U.S.-focused mutual funds outside the country saw $6.5 billion in outflows—the second-largest drop since 2020.

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Nathan Thooft of Manulife Investment Management noted that international confidence in U.S. assets has been damaged. “The real question is whether this is a short-term hit or a long-term shift. We think it’s temporary—but large asset managers are definitely seeking alternatives.”

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This loss of faith may help explain recent dollar weakness. Traditional safe havens like the yen, Swiss franc, and gold have all gained ground, while the euro climbed to a three-year high. In a striking shift, options traders turned bearish on the dollar for the first time in five years.

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Al-Hussainy added a final dose of irony: “I’ve spent years teasing my UK colleagues about how their bond market looked like an emerging market after Brexit. But this week, they finally had the chance to joke back.”

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