Investors ask if Trump serious on tariffs

NEW YORK — Stocks shook off morning losses Monday and surged in the afternoon to send the Standard & Poor's 500 index to its best day in a week.

It's the latest turn for a market prone to shifts not only day to day but also hour to hour, as investors question whether President Donald Trump will really risk a trade war.

The S&P 500 lost as much as 0.6 percent shortly after trading began, only to finish the day 1.1 percent higher. It's reminiscent of what happened Friday, when stocks reversed course amid speculation that Trump was only making an opening bid when he promised to impose stiff tariffs on imported steel and aluminum, rather than a final offer.

Trump took to Twitter again on Monday to defend the tariffs, which have riled trading partners around the world and already sparked talk of retaliation to heighten the worries about a possible trade war.

Later in the day, House Speaker Paul Ryan said he is “extremely worried” about the consequences of a global trade war, according to a statement issued by his office.

“It's incredibly difficult to try to understand the whims of this current administration and to try to make forecasts,” said Emily Roland, head of capital markets research for John Hancock Investments. If a trade war does occur, it would hurt the global economy and the profit growth companies have been producing, two of the big drivers for the market.

“But right now, we think the impact should continue to be modest, as long as it's all talk and no action,” she said.

From its low point of the day to its high, the S&P 500 index carried investors through a swing of 1.9 percentage points. It's the fifth straight day with a gap of more than 1.5 percentage points, as trading has become much more wild since the market's placid, record-setting run from 2017 into January.

The biggest gain in the S&P 500 came from XL Group, which surged after AXA said that it will acquire the insurance and reinsurance company for $15.3 billion. Investors will get $57.60 per XL Group share, and XL Group stock surged $12.62, or 29.1 percent, to $55.92.

Besides tariffs, investors are also keying in on the upcoming U.S. jobs report that's looming at the end of the week.

What first jolted the stock market from its peaceful rise to records was last month's jobs report, which raised the specter of higher inflation. If wages keep accelerating, investors would likely see it as more evidence that the Federal Reserve will raise interest rates higher and faster than expected, which could further upset markets.