President Donald Trump’s announcement of sweeping tariffs sent shockwaves through financial markets on Thursday, with major indices plummeting to their worst levels since 2020. The Dow Jones Industrial Average tumbled 1,679.39 points, or 3.98%, to close at 40,545.93, marking its biggest one-day loss since June 2020. The S&P 500 dropped 4.84%, settling at 5,396.52, while the Nasdaq Composite plunged 5.97% to end at 16,550.61.
The broad market sell-off was triggered by the president’s decision to impose a baseline tariff rate of 10% on all countries, effective April 5. Even steeper duties will be levied against nations that charge higher rates on U.S. goods. The move raised concerns about a potential global trade war and its impact on the economy.
Shares of multinational companies were among the hardest hit, with tech giants and major retailers experiencing significant losses. Investors turned to bonds in search of safety, causing yields to fall as bond prices increased. Bank stocks also suffered outsized losses as the tariff announcement heightened economic uncertainty.
Markets tumble on sweeping tariffs
Major banks lost around 8%, while others dove more than 9%, on track for their biggest one-day slides since the regional banking crisis in March 2023. According to Fitch Ratings, President Trump’s steep duties on imports imply an overall tariff rate of 25%, the highest effective rate in more than 115 years.
The agency warned that the tariffs could significantly raise U.S. recession risks and constrain the Federal Reserve’s ability to lower interest rates further. Small-cap stocks fell into bear market territory amid the broader market turmoil, with losses from their November 25 record close surpassing 21%. Despite the sell-off, Coca-Cola stock hit a record high, rising 2.5% on Thursday, possibly benefiting from a flight to safety by investors.
Individual investors were already the most bearish since the bottom of the global financial crisis in March 2009, according to a weekly poll by the American Association of Individual Investors. Pessimism toward the outlook for stocks over the coming six months soared to 61.9%, up from 52.2% last week. The implementation of steep tariffs has sent shockwaves through the financial markets, with significant losses recorded across major indices and individual sectors.
Concerns over a potential trade war and economic recession continue to dominate investor sentiment as the global economy braces for the impact of the new tariff policy.
