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By Caroline Valetkevitch
NEW YORK (Reuters) -Most major stock indexes ended a turbulent Monday lower as U.S. President Donald Trump showed no sign of easing up on his global trade war, while U.S. Treasury yields rebounded.
The European Union proposed counter-tariffs on Monday, while Trump threatened to add another 50% duty on U.S. imports from China on Wednesday if it did not withdraw its 34% retaliatory tariffs from last week.
U.S. stocks swung between heavy losses and gains throughout the session as investors digested changing headlines related to tariffs.
Stocks have fallen sharply since Trump unveiled sweeping tariffs late on Wednesday that investors worried could drive up inflation and push the global economy into recession.
The Cboe Volatility index rose to 46.98, its highest close since April 2020.
"You can tell shorts are on a hair trigger today, watching around every corner for a possible (Federal Reserve) intervention, tariff pause, or trade deal," said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.
"It goes to show you just how short-lived this market rout is likely to be."
Traders bet the increasing risk of recession could prompt the Fed to cut interest rates as early as May. Futures markets are pricing in almost five quarter-point cuts in U.S. rates this year.
Rising costs will also put pressure on company profit margins, as the U.S. earnings reporting season begins later this week.
The White House denied a report that Trump is considering a 90-day pause in tariffs for all countries except China. The report, which the White House called "fake news," briefly turned U.S. stocks positive early in the session.
The Dow Jones Industrial Average fell 349.26 points, or 0.91%, to 37,965.60, the S&P 500 dropped 11.83 points, or 0.23%, to 5,062.25 and the Nasdaq Composite rose 15.48 points, or 0.10%, to 15,603.26.
During the session, the S&P 500 went from a low of 4,835.04 to a high of 5,246.57.
MSCI's gauge of stocks across the globe fell 18.81 points, or 2.46%, to 745.48.
European shares also slumped, with the STOXX 600 closing at its lowest since January 2024. The pan-European STOXX 600 dropped 4.5%, down for the fourth straight session.
Treasury yields rose on optimism that some countries may negotiate deals with Trump to avoid tariffs.
Trump's advisers said he would be willing to negotiate with countries that are scrambling to head off tariffs as high as 50% due to take effect on Wednesday. White House economic adviser Stephen Miran encouraged countries hoping to escape high reciprocal U.S. tariff rates to make offers to Trump.