Wharton School professor Jeremy Siegel says the stock market sees about an 80% chance that the U.S. reaches a trade deal with China, but those odds decline by the day.
The market will become more uncertain “every day and every week” that a China deal doesn’t happen, he told CNBC.
U.S. stocks are “not far from all-time highs, because there is an expectation in the market that [President Donald] Trump has got to do a trade deal,” he told CNBC. The stock market “has to be higher than it is right now” if Trump wants to get re-elected in 2020.
“There’s an 80% to 90% expectation right now,” Siegel said.
President Donald Trump said Monday he was “not yet ready” to make a deal with China over trade, Reuters reported.
Chinese newspapers responded on Wednesday with a warning Beijing could use rare earths to strike back at the United States. China is a major producer of rare earths, which are used widely in electronics and military equipment.
The prospect of a prolonged standoff between the world’s two biggest economies and the likelihood of Europe and Japan getting dragged in, are making investors seriously worried about economic growth.
Recent data, such as purchasing-manager surveys, have disappointed and another round of tariffs would sharply raise U.S. recession risk, said Justin Onuekwusi, a fund manager at Legal & General Investment Management.
“The market is simply calculating what the impact will be of the next set of tariffs as it doesn’t look like the rhetoric is calming down,” Onuekwusi said.
“Then we have a weaker growth outlook ... so we have the negative shock of trade added to lower growth, and the cushion of protection isn’t as good as it was eight to nine months ago.”
© 2026 Newsmax Finance. All rights reserved.