Trump tariffs send stocks spiraling to worst day in 5 years
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A trader on the floor of the New York Stock Exchange on April 3, 2025. Photo: Michael M. Santiago/Getty Images
Stocks plunged Thursday, as President Trump's sweeping tariff plan kicked off a trade war with broad consequences for the global economy.
Why it matters: The stock market is not the economy, but the reaction is an early, visceral demonstration of the fear the public has over rising prices, slowing growth and the possibility of a recession.
The latest: U.S. indices had their worst day in about 5 years.
- The S&P 500 ended down 4.8%, its biggest one-day drop since June 2020.
- The tech-heavy Nasdaq was off 6%, its worst decline since March 2020.
- The Russell 2000 ended 6.6% lower, its worst day since March 2020. That index, which is considered the benchmark for small-cap stocks, entered into a "bear market," down more than 20% from its late-November highs.
- Those losses followed international weakness, with Japan's Nikkei closing 2.8% lower and the pan-European Stoxx 600 index off 2.6%.
Zoom in: Apparel retail and tech companies led the decline.
- Among the leading decliners in the S&P 500, Dell, Best Buy, Ralph Lauren and Norwegian Cruise Lines all lost more than 15%.
- The Magnificent 7 stocks that led markets higher the last two years were broadly lower as well, with Apple and Amazon both down about 9%.
What they're saying: "Markets are going to continue to struggle with the speed at which tariff details change as well as the ultimate result of the tariffs themselves (e.g. the magnitude of the tariffs)," Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in a note.
- "The silver lining for investors could be that this is only a starting point for negotiations with other countries and ultimately tariff rates will come down across the board – but for now traders are shooting first and asking questions later."
The intrigue: Many investors had hoped Trump's tariff announcement would end weeks of uncertainty over the future of U.S. trade policy.
- They didn't get their wish.
- "For a stock market that was craving certainty, there is now even more ambiguity than before this announcement, " said David Bahnsen, chief investment officer of The Bahnsen Group in California, in a note.
The big picture: Over the long term, it's not necessarily unusual for U.S. stocks to be down 3% or more in a day — historically, it happens on average almost four times a year, per a 2018 analysis.
- But lately it's been rarer — the last 3% down day for the S&P 500 was in August 2024, and before that September 2022.
Go deeper ... Trump's tariffs list is missing one big country: Russia
Editor's note: This story has been updated with the latest market action.
