The stock market continued its collapse Friday as the Nasdaq fell into a bear market amid the fallout from President Donald Trump’s hefty “Liberation Day” tariffs. China matched the U.S. by imposing 34% retaliatory tariffs on U.S. imports. Amid the market turmoil, Trump called on Jerome Powell to cut interest rates, but the Fed chief dampened hopes for an imminent cut.
The stock market continued to plummet Friday following the worst single-day sell off since 2020 on Thursday after President Donald Trump’s “Liberation Day” tariffs sparked fear of a global trade war that could lead the U.S. into a recession.
The Dow Jones Industrial Average collapsed 5.5%, losing 2,231 points, after a 1,679.39-point slide Thursday.
The S&P 500 sank 6% Friday, and the Nasdaq crashed 5.8%, sending the tech-heavy index more than 20% below its recent high and putting it in bear market territory.
On Thursday night, JPMorgan raised the odds of recession from 40% to 60% following Trump’s latest tariffs.
As investors seek security of bonds, the 10-year Treasury yield briefly slipped below 4% Friday, close to its lowest levels since September, before climbing to 4.015%.
Early Friday, Beijing announced it will retaliate against Trump’s 34% tariffs on imports from China by imposing matching levies on U.S. imports. Additionally, China added several companies to its “unreliable entities list,” which addresses foreign entities that have violated market rules or contractual obligations. China also opened an antitrust investigation into DuPont, causing its shares to slip 12%.
Trump has stood firm on his aggressive import duties, saying that his “policies will never change,” in a Truth Social post.
In another post on Truth Social, Trump demanded Federal Reserve Chair Jerome Powell lower interest rates and “stop playing politics.”
But Powell warned Friday that sweeping tariffs could push inflation higher, chilling hopes that interest rates will fall soon.
“Higher tariffs will be working their way through the economy and are likely to raise inflation in coming quarters,” he said at a business journalism conference in Washington, D.C.
Trump’s tariffs were “significantly larger than expected,” Powell added. While he noted that the economy is currently healthy, citing a positive jobs report released on Friday, he said that uncertainty from Trump’s hefty import duties is making consumers and businesses nervous, forcing the Fed into a holding period.
“We are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” Powell said. “It is too soon to say what will be the appropriate path for monetary policy.”
Mark Zuckerberg, Cristiano Ronaldo, Jennifer Aniston, and Prince Harry have one thing in common: They all own Oura Rings.
The Finnish company Oura, founded in 2013, is on the verge of a growth spurt as its niche innovation in wearable tech heads for the mainstream. Demand has boomed recently, with sales set to double this year and nearing the $500 million mark.
Oura just capped off a Series D funding round in December led by Fidelity Management, which values the company at $5.2 billion. The capital injection is a key milestone, given that Oura was valued at half that figure just two years ago.
The global wearable tech market is set to expand by 14.6% by the end of the decade. Of that group, smart glasses and rings are the ones seeing the most growth.
This could be just the beginning of Oura’s popularity as the company also has plans to go “beyond the ring” with its new influx of funding, CEO Tom Hale said.
“We’re seeing kind of cultural relevance here in that Oura is becoming a shorthand for how you’re doing. It’s like the doctor’s note that isn’t a doctor’s note,” Hale told Fortune‘s Leadership Next podcast earlier this year.
So, what made Oura a worthy competitor to the Apple Watches of the world?
Leaning into sleep
Oura was founded in Finland by Petteri Lahtela, Markku Koskela, and Kari Kivela, who wanted to find a way to gather wellness information on one’s finger.
In 2015, the young startup launched a Kickstarter campaign (like Peloton and Allbirds did), raising over $650,000 by the end and exceeding its goal sixfold. The following year, Oura won a CES Innovation Award that helped establish it as an emerging tech company.
From its early days, Oura’s approach to overall wellness lured many users amid a growing focus on health. More specifically, the Oura Ring gave people insights on their sleep levels, which hit a “sweet spot with a particular customer set,” Hale said, according to the Financial Times.
Oura’s app shows its users a “Readiness Score,” a number from one to 100 that reveals their preparedness for the day based on various health metrics, including sleep quality, heart rate, body temperature, and more.
“Wearable tech is for anyone who wants to better understand the state of their health and live more optimally for longer,” Hale said.
MELBOURNE, AUSTRALIA – OCTOBER 18: Prince Harry, Duke of Sussex wearing a Oura Health fitness tracker ring and Meghan, Duchess of Sussex walk at South Melbourne Beach on October 18, 2018 in Melbourne, Australia. BeachPatrol is a network of volunteers who are passionate about keeping Melbourne’s beaches and foreshores clear of litter to reduce the negative impact of litter on the marine environment and food chain, and provide a safe environment for the public to enjoy their local beach.The Duke and Duchess of Sussex are on their official 16-day Autumn tour visiting cities in Australia, Fiji, Tonga and New Zealand. (Photo by Scott Barbour/Getty Images)
Smartwatches from Apple or Garmin serve daily utility or track exercise but aren’t comfortable to wear all day long. They may also need to be charged more frequently. On the other hand, Oura Rings fit more seamlessly as an accessory and have a longer battery life.
The latest version, the Oura Ring 4, which launched in October, aims to be even sleeker in its look and feel.
Don’t let the size of Oura’s devices fool you into thinking they cost less. They follow a subscription model that costs $6 a month, while the ring costs upwards of $350.
Put a ring on it
Wellness and longevity are hot topics—and Oura is playing the long game in the tech market by catering to these trends.
Celebrities have been spotted wearing Oura Rings, a culmination of the overall clout the device has gathered over the past decade. CEOs think the device boosts their performance by giving them specifics on their energy levels throughout the day.
For now, Oura is a leader in the tech it pioneered. Hale confidently wrote off Apple foraying into the wearable ring market, leaving the Finnish company to contend with a small but growing pool of rivals.
However, Hale has noticed people pairing up an Oura ring with another wearable—often times, an Apple Watch, he told Fortune.
Competitors are in plenty: for instance, this summer Samsung launched a Galaxy Ring, which doesn’t charge a subscription fee and is made by one of the biggest tech companies globally. Still, Hale is unfazed by the competition; he argues that it further underscores the unique value of this category of wearable tech.
Meanwhile, the Oura Ring is finding new ways to be indispensable: It‘s been used in marriage proposals and indicated how stressed Americans were in the lead-up to Donald Trump’s election.
Women are Oura’s fastest-growing segment, with those between the ages of 25 and 34 representing a third of the women using its rings. Following Trump’s victory, Hale quelled concerns about the privacy of medical data, assuring users that their information would be kept private.
“Our business model is we serve you and our goal in serving you is to improve your health,” Hale told Fortune. “You think about like some of our competition, maybe they’re not quite so scrupulous or maybe they just have stronger incentives to actually, do something with that data that’s not, strictly speaking, in the interests of your health. We are 100% focused on it.”
A version of this story was originally published on Fortune.com on Dec. 20, 2024.
Treasury Secretary Scott Bessent denied that chaos in the bond market over the deleveraging of so-called basis trades forced President Trump into putting his global trade tariffs on pause for 90 days. Rather, Bessent said, this was Trump’s plan all along.
Treasury Secretary Scott Bessent denied Wednesday that bond market volatility had forced the president into putting a 90-day pause on most trade tariffs.
Following President Trump’s announcement that most of the tariffs he’d planned for U.S. trade partners would now not go into effect pending further negotiations, Bessent was asked by reporters at the White House whether a shocking rise in bond yields that sparked fears about a liquidity crisis and questions about whether Treasuries were losing their safe-haven status had pushed Trump into the partial retreat.
“This was driven by the president’s strategy,” the Treasury secretary said. “He and I had a long talk on Sunday, and this was his strategy all along.”
Stocks jumped after Trump announced the 90-day pause, in which most countries (except China) will be moved back to a baseline 10% tax on imports.
“This was the news we and everyone on the Street [were] waiting for as the pressure on Trump took on a life of its own,” Dan Ives and Sam Brandeis of Wedbush Securities wrote in a note Wednesday afternoon. “And the eye-popping rise of the 10-year yield was ultimately too much to hold his line on the self-inflicted Armageddon tariff unleashed at midnight. Now we would expect massive negotiations across the board over the coming months including China being front and center as the biggest wild card.”
Earlier, Bessent claimed that the bond market would calm down as highly leveraged bond trades unwound. He also noted that this type of deleveraging was normal and expected.
A select group of hedge funds profit handsomely from the so-called basis trade, which involves heavy borrowing to take advantage of tiny price discrepancies between Treasuries and futures linked to those bonds. Typically, this helps keep money markets humming. When the $1 trillion trade unwinds, however, yields surge as the market struggles to absorb a massive increase in the supply of Treasuries.
In an interview with Fox Business, Bessent said he’s seen a similar story play out many times during his hedge fund career.
“There’s one of these deleveraging convulsions that’s going on right now in the markets,” he said. “It’s in the fixed-income market. There are some very large leverage players who are experiencing losses that are having to deleverage.”
Investors initially piled into Treasuries last week as the stock market plunged after President Donald Trump unveiled sweeping “reciprocal tariffs,” which went into effect Wednesday morning. Early Monday, the yield on the benchmark 10-year Treasury note fell below 4% for the first time since October, down from about 4.8% in early January. A fixed-income selloff soon followed, however, and the 10-year yield—which rises as the price of the bond falls—surged above 4.5% Wednesday morning before retreating near the 4.4% mark as a successful Treasury auction eased concerns about demand for U.S. debt, per CNBC.
Bessent addressed concerns about chaos in fixed income by saying, “I believe that there is nothing systemic about this. I think that it is an uncomfortable but normal deleveraging that’s going on in the bond market.”
Basis trade could impact mortgages, car loans
Market watchers have cited many possible reasons for the confusing selloff in bonds. As trade policy uncertainty reigns, investors could be desperate to simply hold cash, similar to the onset of the COVID-19 pandemic. Traders are struggling to price in how the Federal Reserve could react if a global trade war induces dreaded stagflation—rising inflation coupled with slowing growth. There’s a chance China and other foreign holders of U.S. debt are flooding the market with Treasuries to retaliate against Trump’s tariffs.
Evaluating all those explanations relies on circumstantial evidence of what’s going in markets, Torsten Sløk, chief economist at private equity giant Apollo, told Fortune on Tuesday.
Still, he thinks the basis trade is a likely culprit. For hedge funds to profit significantly on the tiny arbitrage opportunity, they need to do a lot of borrowing. According to the Financial Times, they might take as much as 50- to 100-times leverage, meaning $10 million in capital, for example, could support $1 billion of Treasury purchases.
During periods of extreme volatility, however, that leaves hedge funds vulnerable to margin calls from broker-dealers, Sløk noted.
“It is very, very unusual that you have long-term interest rates going up when the stock market is going down,” he said. “That’s telling me that there [are] some distressed, forced sellers out there.”
This is a concern, Sløk said, because long-term Treasury yields, particularly the 10-year, are the basis for mortgage rates, car loans, and other types of common borrowing costs throughout the economy.
“You don’t want long-term rates to go up for non-economic reasons,” he said.
To prevent that during the early days of the pandemic, the Federal Reserve had to buy $1.6 trillion in Treasuries over the course of several weeks. The central bank also temporarily loosened bank capital requirements instituted after the Global Financial Crisis. Exempting Treasuries and bank reserves from the so-called supplementary leverage ratio enabled lenders to buy more U.S. debt.
While insisting the market will steady as hedge funds de-risk, Bessent indicated Wednesday he wanted to make that change permanent as part of a broader deregulatory push.
Update: This story was updated with a longer version of a quote from Treasury Secretary Scott Bessent after President Donald Trump’s announcement of a 90-day pause on reciprocal tariffs, as well as commentary from a note written by Dan Ives and Sam Brandeis of Wedbush Securities.
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