US stocks suffered their worst drop since the pandemic, erasing $2.5 trillion in value after President Donald Trump announced major new trade tariffs. These drastic measures triggered widespread fears of recession and pushed investors toward safer options like bonds and the Japanese yen.
The S&P 500 Index fell 4.8% – its biggest single-day drop since June 2020 – putting it back into what experts call a “technical correction.” Markets around the world, from Tokyo to London, experienced similar severe declines. The tech-heavy Nasdaq 100 Index dropped 5.4%, its worst performance since September 2022, with Apple losing 9% and both Nvidia and Tesla taking major hits.
Clothing and footwear companies were hit especially hard after Trump announced new tariffs on important manufacturing countries like Vietnam and Indonesia. Nike’s stock plunged 14%, while Lululemon, Abercrombie & Fitch, and Gap also saw significant losses.
On Wednesday, Trump imposed what are being called the steepest American tariffs in a century. He announced a 10% tariff on all imports to the US, with even higher rates for about 60 countries, claiming these measures would address trade imbalances with the US. Smaller companies took some of the worst hits – the Russell 2000 Index dropped 6.6%, entering “bear market” territory after losing more than 20% from its late 2021 peak.
Although selling was widespread, investors particularly targeted riskier stocks, especially fast-growing companies that had led market gains over the past two years. Market volatility has surged, with the Cboe Volatility Index hitting 30, its highest level this year. If selling continues on Friday when the government releases its March jobs report, the S&P could record losses in six of the past seven weeks.
The upcoming jobs report will be the first major economic data for the quarter and could significantly impact bonds, stocks, and currencies, as well as influence the Federal Reserve’s next decisions. Investors will also be paying close attention to Fed Chair Jerome Powell’s scheduled remarks at the end of the week for any signs that economic weakness might be spreading to the job market.
