Market Recap: Stocks Plummet as Trump Tariffs Trigger Global Selloff – April 7, 2025

Major Indexes Suffer Steep Declines Amid Trade War Fears

Wall Street experienced a brutal trading session on Monday, April 7, 2025, as markets continued to reel from President Trump’s sweeping tariff announcements. The selloff, which began last week, intensified as investors grappled with the potential economic impact of what many analysts are calling the most significant trade policy shift in over a century.

The S&P 500 fell 2.21% to 4,961.73, extending its losses to more than 17% from its February peak and pushing the benchmark index perilously close to bear market territory. The Dow Jones Industrial Average plunged 2.70% to 37,282.14, shedding over 1,000 points in a single session. Meanwhile, the Nasdaq Composite dropped 1.95% to 15,283.41, having already entered bear market territory last week after falling more than 22% from its record high.

The market rout follows President Trump’s implementation of a baseline 10% tariff on all global imports, which went into effect over the weekend, with additional “reciprocal” tariffs set to take effect on April 9. These measures would bring the average U.S. tariff rate to nearly 30% – the highest in more than 100 years.

“Magnificent Seven” Tech Stocks Continue to Suffer

The once-invincible “Magnificent Seven” tech stocks continued their dramatic selloff on Monday, with the group shedding as much as $647 billion in market capitalization during early trading.

Tesla (TSLA) was among the hardest hit, falling 5.25% as analysts noted the company “still derives a considerable amount of its parts/batteries from sources outside the US including China.” Apple (AAPL) dropped 5.91%, with Wedbush estimating that approximately 90% of iPhones are manufactured in China, which is set to face 54% tariffs under the new rules.

Other tech giants also suffered significant losses, with Microsoft (MSFT) down 1.78% and Nvidia (NVDA) slipping 0.34%. Some tech stocks managed to pare losses throughout the day, with Amazon (AMZN) actually gaining 0.04% after initially dropping more than 4%.

Analysts point out that the “Magnificent Seven” may be particularly vulnerable to trade tensions, as approximately 50% of their earnings come from abroad, compared to 41% for the broader S&P 500.

White House and Federal Reserve Response

Despite the market turmoil, the White House has shown little indication of backing down from its trade policy. President Trump addressed the market selloff on Sunday, stating: “I don’t want anything to go down, but sometimes you have to take medicine to fix something.” This comment has done little to reassure nervous investors looking for signs that the administration might moderate its stance.

Meanwhile, Federal Reserve Chair Jerome Powell delivered a speech on Friday that offered mixed signals regarding potential monetary policy responses. Powell noted that while the labor market remains in good shape, the Fed’s policy stance is “well positioned to wait for greater clarity… (on the likely effects of trade and fiscal policy, for example) before considering any changes in monetary policy.”

Global Market Reaction and Retaliation

The market selloff has extended well beyond U.S. borders. European stocks dropped sharply on Monday, with the Stoxx 600 falling nearly 6% and Germany’s DAX index initially shedding more than 10% before paring some losses. Asian markets were hit even harder, with Taiwan stocks plummeting almost 10% – the biggest one-day percentage fall on record.

Trading partners have begun announcing retaliatory measures. China has already announced 34% tariffs on all U.S. exports, while EU countries are seeking to present a united front, likely approving targeted countermeasures on up to $28 billion of U.S. imports. These responses have heightened concerns about a spiraling global trade war.

Upcoming Market Events to Watch

Investors will be closely monitoring several key economic releases and corporate events this week that could further influence market sentiment:

1. **Inflation Data**: The Consumer Price Index (CPI) will be released on Thursday, followed by the Producer Price Index (PPI) on Friday. These reports will be particularly significant given concerns about tariffs potentially fueling inflation.

2. **Federal Reserve Minutes**: The minutes from the most recent Federal Open Market Committee (FOMC) meeting will be released on Wednesday, potentially providing additional insights into the Fed’s thinking on monetary policy amid trade tensions.

3. **Bank Earnings**: The first-quarter earnings season kicks off on Friday with reports from major financial institutions including JPMorgan Chase (JPM), Wells Fargo (WFC), BlackRock (BLK), and Bank of New York Mellon (BK). These results could offer important clues about the broader economic impact of recent market volatility.

Recession Risks and Market Outlook

The market turmoil has significantly increased recession concerns. Goldman Sachs now sees a 45% chance of a U.S. recession this year, while JPMorgan estimates a 60% chance of a wider global downturn.

Despite the gloomy short-term outlook, some analysts maintain a cautiously optimistic longer-term view. Oppenheimer has revised its year-end S&P 500 price target to 5,950, which still represents approximately 15% upside from current levels. The firm notes that “at current levels the equity market appears oversold” and suggests that should “cooler heads prevail in negotiations on trade,” market targets may need to be adjusted higher once again.

As markets continue to digest the implications of the new tariff regime, volatility is expected to remain elevated. Investors are advised to prepare for further turbulence as trade negotiations unfold and the first-quarter earnings season provides additional insights into the economic impact of these policy shifts.