WALL STREET BLOODBATH: Trump’s tariffs send stock markets plunging over recession fears

Wall Street benchmarks slumped on Thursday, ending with the largest one-day percentage losses in years, as President Donald Trump’s sweeping tariffs 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 slapped a 10% tariff on most U.S. imports and much higher levies on dozens of other countries.

According to preliminary data, the S&P 500 lost 275.05 points, or 4.85%, to end at 5,395.92 points, while the Nasdaq Composite dropped 1,053.60 points, or 5.99%, to 16,547.45. The Dow Jones Industrial Average fell 1,682.61 points, or 3.98%, to 40,542.71.

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 U.S. stocks to record highs.

Investors sold positions to reflect the new economic reality, with concerns about how other countries would react to Trump’s Rose Garden proclamations.

Tourists outside the New York Stock Exchange on April 3, 2025.Photo by Lloyd Mitchell

China and the European Union, which faces a 20% duty, vowed retaliation. 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 through into the wider economy. The CBOE Volatility index, known as Wall Street’s fear gauge, touched a three-week high.

“There are still a lot more questions than answers out here,” said Steven DeSanctis, small and mid-cap strategist at Jefferies Financial Group.

High-flying technology stocks suffered big declines after pushing Wall Street to record highs in recent years.

Apple sank, reeling from an aggregate 54% tariff on China, the base for much of the iPhone maker’s manufacturing. Nvidia slumped, as did Amazon.com.

U.S. stocks have lost ground since Trump took office in January, with the S&P 500 and the Nasdaq dropping 10% from record highs last month, marking a correction, as investors priced in the economic damage from the tariffs.

Traders are ramping up expectations for the Federal Reserve to cut interest rates four times this year, starting with a quarter-point cut in June.

“The Fed does have considerable firepower to help the market,” said George Bory, chief investment strategist for the fixed income team at Allspring Global Investments.

“The market is now pricing in more rate cuts, and perhaps sooner,” adding an easing in June now seemed guaranteed, with the chance of a cut in May as well.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 2, 2025. REUTERS/Brendan McDermid

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 U.S. economy’s health and the future path of interest rates.

Retailers were hit hard, with Nike and Ralph Lauren falling on a raft of new tariffs on major production hubs including Vietnam, Indonesia and China.

Big banks such as Citigroup and Bank of America, which are sensitive to economic risks, fell, as did JPMorgan Chase & Co.

The U.S. small-cap Russell 2000 index tumbled, underscoring concerns about the health of the domestic economy.

“Small-cap companies tend to be suppliers to the large-cap companies, so as things go bad for the large-cap names because of tariffs, they are going to put a lot of pressure on their small-cap suppliers,” said Jefferies’ DeSanctis.

Exxon Mobil and Chevron fell, as crude prices slumped 6.8% on the tariffs and OPEC+ speeding up output hikes.

Consumer staples was one of the few bright spots. The sector is traditionally considered a defensive play, but it was also buoyed on Thursday by Lamb Weston, which gained after reporting earnings.