Market Plunges on “Liberation Day” Tariffs: Stock Market Recap for April 4, 2025

Major Indexes Suffer Worst Single-Day Losses Since 2020

U.S. stock markets continued their dramatic sell-off on Friday, April 4, 2025, following President Trump’s announcement of “Liberation Day” tariffs. The market recorded one of its worst performances in years as investors grappled with concerns about potential economic impacts and inflation risks.

The Dow Jones Industrial Average (DJI) fell further today, trading around 39,642.00, down 1,134.00 points (-2.78%) in pre-market trading, following Thursday’s collapse of 4% or 1,679.39 points. The S&P 500 was down 2.81% in futures trading, while the Nasdaq Composite futures dropped 2.96%.

The tech-heavy Nasdaq Composite has been particularly hard hit, entering correction territory after Thursday’s 6% plunge, its worst single-day performance since March 2020. The S&P 500 similarly suffered, falling 4.8% on Thursday to finish at 5,396.52, marking its worst single-day performance since June 2020.

Trump’s “Liberation Day” Tariffs Rattle Markets

The primary catalyst for the market’s dramatic decline has been President Trump’s announcement of “Liberation Day” tariffs. The baseline tariff of 10% will be imposed on all imports starting April 5, with rates potentially rising as high as 54% on certain countries depending on what duties those governments levy on U.S. exports.

Financial experts and economists have expressed significant concerns about these tariffs’ potential impact on U.S. economic growth, particularly regarding inflation, which has remained stubbornly high despite the Federal Reserve cutting benchmark interest rates by 1% last year. Market participants increasingly fear a near-term recession or, in the worst case, stagflation in the U.S. economy.

Magnificent Seven Stocks Lead the Decline

The “Magnificent Seven” tech stocks, which have been market leaders for the past year, have been particularly hard hit in the recent sell-off. Through the first three months of 2025, these mega-cap stocks have posted negative performance, with their declines accelerating following the tariff announcement.

NVIDIA Corporation (NVDA) dropped 7.81% on Thursday and continued its decline below both its 50-day and 200-day moving averages. Apple (AAPL) and Microsoft (MSFT) are both trading below their 200-day lines, with Microsoft down 19.7% from its all-time high.

Tesla (TSLA) showed some resilience on Thursday, rising 6% but remains approximately 50% off its December 2023 all-time high of $488.53. Amazon (AMZN) has fallen 25.8% from its peak, bringing its price-to-earnings ratio to around 32, its cheapest valuation since 2009.

Sector Performance and Notable Movers

The market decline has been broad-based, with 10 out of 11 sectors in the S&P 500 ending Thursday in negative territory. Consumer Discretionary, Technology, and Energy sectors were the hardest hit, tumbling 6%, 6.8%, and 7.9%, respectively.

Among the day’s biggest losers were RH (formerly Restoration Hardware), which plummeted 40.09%, V.F. Corporation (VFC), down 28.74%, and Five Below (FIVE), which fell 27.81%.

A few stocks bucked the trend, with The Goodyear Tire & Rubber Company (GT) gaining 11.73%, Lamb Weston Holdings (LW) up 10.01%, and McDonald’s Corporation (MCD) rising 2.15%.

Economic Data and Upcoming Events

Recent economic data has been mixed. Initial unemployment claims remained unchanged at 219,000 for the week ended March 29, while continuing claims rose 56,000 to 1.903 million. The U.S. trade deficit for goods and services in February came in at $122.7 billion, lower than the consensus estimate of $123.4 billion.

The Institute of Supply Management reported that the services PMI for March came in at 50.8%, missing the consensus estimate of 52.9% and February’s reading of 53.5%.

Looking ahead, investors will be watching several upcoming earnings reports. The Cigna Group (CI) will release its first quarter 2025 financial results on Friday, May 2, 2025, with a conference call scheduled for 8:30 a.m. ET that day.

Market Outlook

The fear-gauge CBOE Volatility Index (VIX) surged 39.6% to 30.02 on Thursday, marking its highest closing level since August 5, 2024. This elevated level indicates significant market uncertainty and investor anxiety.

As markets continue to process the implications of the new tariff policies, analysts are closely monitoring economic indicators for signs of inflation acceleration or economic slowdown. The combination of trade tensions, persistent inflation concerns, and the potential for central bank policy adjustments will likely continue to drive market volatility in the near term.

Investors are advised to maintain diversified portfolios and consider defensive positioning until market conditions stabilize. The current sell-off may present buying opportunities in high-quality stocks trading at discounted valuations, particularly among the Magnificent Seven companies that maintain strong fundamentals despite recent price declines.