Market Recap: Wall Street Reels as Trump’s Tariffs Trigger Global Sell-Off

Major Indexes Plummet Amid Tariff Concerns and China Retaliation

U.S. stock markets experienced a dramatic sell-off on Friday, April 4, 2025, continuing the previous day’s rout as investors grappled with escalating trade tensions following President Donald Trump’s “Liberation Day” tariff announcements. The market turmoil intensified after China announced retaliatory measures, raising fears of a potential global recession.

The major indexes posted significant losses for the second consecutive day. The Dow Jones Industrial Average (DJI) fell approximately 1,100 points at the open, following Thursday’s collapse of 1,679.39 points (4%) that brought the blue-chip index to 40,545.93. The S&P 500 dropped 2.6% in early trading after shedding 4.8% or 274.45 points on Thursday to finish at 5,396.52. The tech-heavy Nasdaq Composite, which is now in correction territory, was down 3.1% following Thursday’s 6% plunge that brought it to 16,550.61.

Trump’s Tariffs Spark Global Market Fears

The market turmoil was triggered by President Trump’s announcement of “Liberation Day” tariffs, which include a baseline 10% tariff on all imports starting April 5, with rates potentially rising as high as 54% depending on what duties foreign governments levy on U.S. exports. China’s commerce ministry responded on Friday by announcing a 34% levy on all U.S. products, matching the tariff rate on Chinese goods coming into the U.S.

Economists and financial experts are highly concerned about the effect of these tariffs on U.S. economic growth, particularly on inflation, which remains elevated despite the Fed’s interest rate cuts last year. JPMorgan has raised the odds of a recession this year from 40% to 60%, with chief economist Bruce Kasman noting that “full implementation of announced policies would likely push the U.S. and possibly global economy into recession this year.”

Sector Performance and Notable Stock Movements

The sell-off was broad-based, with technology stocks bearing the brunt of the decline due to their significant exposure to China. Companies with large Chinese exposure led the pre-market declines, with Apple (AAPL) and Qualcomm (QCOM) down 5% and 6%, respectively. Tesla (TSLA) lost 5%, while Caterpillar (CAT) shed 6%. Semiconductor giant Nvidia (NVDA) fell about 4%.

Bank stocks also tumbled amid growing concerns about a U.S. economic slowdown. Morgan Stanley (MS) dropped 5%, Goldman Sachs (GS) shed 4.5%, while Citigroup (C) and JPMorgan Chase (JPM) each slid more than 4%.

Among the few gainers, The Goodyear Tire & Rubber Company (GT) stood out with an 11.73% increase, while Lamb Weston Holdings (LW) rose 10.01%. McDonald’s Corporation (MCD) also bucked the trend, gaining 2.15%.

Weekly Performance and Market Outlook

The three major indexes are on track to finish the week squarely in the red. The Nasdaq Composite and S&P 500 have tumbled 4.5% and 3.3%, respectively, week to date, tracking for their worst weekly performances since September 2024 and sixth negative week of the last seven. The Dow has slid 2.5% this week.

For the year, the S&P 500 is down 8.2%, the Dow has fallen 4.7%, and the Nasdaq is down 14.3%. The Russell 2000 index of smaller companies, which is particularly vulnerable to economic downturns, has also declined 14.3% year-to-date.

Upcoming Economic Events and Earnings Releases

Investors will be closely monitoring upcoming economic data and Federal Reserve communications for insights into how the central bank might respond to the current market turmoil and potential economic slowdown.

Key upcoming events include:

– Chair Jerome Powell’s speech on “Economic Outlook” at the Society for Advancing Business Editing and Writing (SABEW) Annual Conference on April 4
– Governor Michael S. Barr’s speech on “Artificial Intelligence and Banking” at the Federal Reserve Bank of San Francisco on April 4
– The release of the Employment Situation report on April 4
– Consumer Credit (G.19) data release on April 7
– Governor Michelle W. Bowman’s nomination hearing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on April 10

On the corporate front, several companies are scheduled to report earnings in the coming days, with approximately 60 earnings releases expected on Friday, April 4. Investors will be particularly attentive to management guidance regarding the potential impact of the new tariffs on business operations and outlook.

Market Sentiment and Bond Yields

Market sentiment has turned decidedly negative, with the fear-gauge CBOE Volatility Index (VIX) surging 39.6% to 30.02 on Thursday, marking its highest closing level since August 5, 2024. This indicates significant investor anxiety about near-term market prospects.

The 10-year Treasury yield fell back below 4% on Friday as investors sought safety in bonds, pushing prices up and rates lower. This flight to safety reflects growing concerns about economic growth and the potential for a recession.

Conclusion: Navigating Uncertain Waters

As markets continue to digest the implications of the new tariff policies and potential retaliatory measures from trading partners, investors should prepare for continued volatility. The combination of trade tensions, inflation concerns, and recession fears creates a challenging environment that will likely require careful portfolio management in the coming weeks.

Market participants will be closely watching for any signs of policy adjustments or diplomatic developments that might ease trade tensions, as well as upcoming economic data that could provide insights into the resilience of the U.S. economy in the face of these new challenges.