New York — US stocks plunged on Thursday, with the bloodbath engulfing megacap technology names and small companies alike, as President Donald Trump’s sweeping tariffs on US trade partners ignited fears of an all-out trade war and a global economic recession.
Investors fled from risky assets, seeking the safety of government bonds, after Trump imposed a 10% tariff on most US imports and much higher levies on dozens of other countries.
The tariffs, poised to disrupt the global trade order, highlight a stark shift from just a few months ago when the promise of business-friendly policies under the Trump administration propelled US stocks to record highs.
Investors sold positions to reflect the new economic reality, with concerns about how other countries would react to Trump’s proclamations.
China vowed retaliation, as did the EU, which faces a 20% duty. South Korea, Mexico, India and several other trading partners said they would hold off for now as they seek concessions before the targeted tariffs take effect on April 9.
The coming days are expected to be volatile, as events unfold and the full effect of Trump’s economic actions start to feed into the wider economy. The CBOE Volatility index, known as Wall Street’s fear gauge, touched a three-week high at 27.30 points.
“I think the market is over-reacting. They are seeing it as one side: it’s going to slow down the economy, and put inflationary pressures on,” said Jim Elios, chief investment officer of Elios Financial Group. “But I think this is the first round of negotiations with these nations.”
At 844pm SA time the S&P 500 was down 4.1% at 5,439.57 points, while the Nasdaq Composite slumped 5.33% to to 16,662.96. The Dow Jones Industrial Average was down 3.28% at 40,842.17.
High-flying technology stocks suffered big declines after pushing Wall Street to record highs in recent years.
Apple sank 8.8%, reeling from an aggregate 54% tariff on China, which is the base for much of the iPhone maker’s manufacturing. Nvidia slumped 6.5% and Amazon.com dropped 7.6%.
US stocks have lost ground since Trump took office in January, with the S&P 500 and the Nasdaq down 10% from record highs last month — technically marking a correction — as investors priced in the economic damage from the tariffs.
Traders are increasing up expectations for the Federal Reserve to cut interest rates four times this year, starting with a quarter-point cut in June.
Powell’s speech
That heightens the significance of Friday’s payrolls data and Fed chair Jerome Powell’s speech the same day, which could offer crucial insights into the US economy's health and the path of interest rates.
Retailers were hit hard, with Nike dropping 12.2% and Ralph Lauren falling 15.9% on a raft of new tariffs on important production hubs including Vietnam, Indonesia and China.
Big banks such as Citigroup and Bank of America, which are sensitive to economic risks, fell more than 9% each. JPMorgan Chase & Co. lost 5.6%.
The US small-cap Russell 2000 index tumbled 5.8%, underscoring concerns about the health of the domestic economy.
ExxonMobil and Chevron fell 4% and 5.1%, respectively, as crude prices slumped 6.7% on the tariffs and Opec+ speeding up output hikes.
Consumer staples was one of the few bright spots, rising 0.8%. The sector is traditionally considered a defensive play, but it was also buoyed on Thursday by Lamb Weston, which gained 10% after reporting earnings.
Update: April 4 2025
This story has been updated with new information.
Reuters
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