By Brian Evans, John Melloy and Pia Singh
Stocks plummeted Thursday, sending the S&P 500 back into correction territory for its biggest one-day loss since 2020, after President Donald Trump unveiled sweeping tariffs, raising the risk of a global trade war that plunges the economy into a recession.
The broad market index dropped 4.84% and settled at 5,396.52, posting its worst day since June 2020. The Dow Jones Industrial Average tumbled 1,679.39 points, or 3.98%, to close at 40,545.93 and mark its worst session since June 2020. The Nasdaq Composite plummeted 5.97% and ended at 16,550.61, registering its biggest decline since March 2020. The slide across equities was broad, with decliners at the New York Stock Exchange outnumbering advancers by six to one.
Thursday’s moves sent the S&P 500 to its lowest level since before Trump’s election win in November. The benchmark now sits about 12% from its record close touched in February.
Shares of multinational companies tumbled. Nike and Apple dropped 13% and 10%, respectively. Big sellers of imported goods were among the hardest hit. Five Below lost 26%, Dollar Tree tumbled 12%, and Gap plunged 21%. Tech shares dropped in an overall risk-off mood, with Nvidia off 7% and Tesla down 5%.
A baseline tariff rate of 10% on all countries goes into effect April 5. Even bigger duties against countries that levy higher rates on the U.S. will be charged in coming days, according to the administration.
On Thursday, the president acknowledged the market sell-off and likened the implementation of tariffs to “an operation, like when a patient gets operated on.”
“The market’s are going to boom. The stock is going to boom. The country is going to boom. And the rest of the world wants to see is there any way they can make a deal,” Trump said.
Traders had hoped that Trump’s tariff plan would use a 10% rate, or at worst a 20% rate as a cap, not as a minimum starting point. Rates will end up being much higher than what investors had expected for many nations. For example, the effective tariff rate for China will now be 54% when accounting for the new reciprocal rate and duties already levied against the country, the White House clarified to CNBC.
“This was the worst case scenario for tariffs and [they] were not priced-into the markets, which is why we are seeing such a risk-off reaction,” said Mary Ann Bartels, chief investment strategist, Sanctuary Wealth. ”The big question is if 5,500 can hold on the S&P 500. If it cannot hold, we may see another 5-10% downside, which could likely point to a bottom of 5,200-5,400.”
Investors turned to bonds in their search for safety. The benchmark 10-year Treasury yield nearly fell below 4% as bond prices increased.
The benchmark has been hit hard since late February with it falling into correction territory — or 10% down from its record — because of the heightened uncertainty caused by Trump’s ongoing tariff announcements. This uncertainty has started to show up in some sluggish economic data, which further pressured stocks by heightening recession fears.
JPMorgan economists said a recession was now likely if these new tariff rates are sustained and not negotiated lower.
Trump says ‘market’s are going to boom’
Trump was asked when leaving the White House on Thursday about the stock market decline, and he indicated that this would be a temporary reaction to the tariffs.
“I think it’s going very well. It was an operation, like when a patient gets operated on, and it’s a big thing. I said this would exactly be the way it is. … The markets are going to boom. The stock is going to boom. The country is going to boom. And the rest of the world wants to see is there any way they can make a deal,” Trump said.
— Jesse Pound
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