The U.S. stock market witnessed an unprecedented collapse, with the S&P 500 erasing $5 trillion in market value within just 48 hours. This sharp drop—driven by fears of a global trade war—surpassed the $3.3 trillion wiped out during the early pandemic turmoil in March 2020, according to data from LSEG.
The catalyst behind this financial shock: President Donald Trump’s sweeping new tariffs. Unveiled Wednesday, they include a 10% levy on most U.S. imports and sharply higher duties on dozens of countries, the steepest trade restrictions in over a century.
Investor panic intensified after China retaliated with a 34% tariff on U.S. goods. This tit-for-tat escalation has heightened concerns of a full-blown trade war and a potential global recession. JPMorgan now places the likelihood of a worldwide recession at 60%, up from 40%.
Major Indexes Confirm Correction Status
Markets across the board crumbled. The Nasdaq officially entered a bear market, down 22.7% from its December peak. The Dow Jones Industrial Average dropped 2,231 points (-5.5%) to 38,314.86, confirming a correction after falling more than 10% from its recent high.
The S&P 500 plunged 322 points (-5.97%) to 5,074.08, while the Nasdaq Composite slid 963 points (-5.82%) to 15,587.79.
Other notable declines:
- Apple Inc. (NASDAQ:AAPL) fell 7.3%
- Semiconductor Index dropped 7.6%
- Pan-European STOXX 600 declined 5.1%, now 12% below its March high
- MSCI’s global stock index dropped 5.37%
Commodities mirrored the selloff. Brent crude futures sank 6.5% to $65.58, and U.S. crude plummeted 7.4% to $61.99—both at their lowest since 2021.
Safe-Haven Rush Boosts Bonds, Lifts Dollar
Amid the carnage, investors sought refuge in government bonds. The yield on the 10-year U.S. Treasury note fell to 3.933%, touching a six-month low earlier in the session. German 10-year bund yields dropped 17 basis points, marking a sharp shift to safety.
Fed Chair Jerome Powell acknowledged the unexpected magnitude of Trump’s tariffs, warning of potential inflation and slowing growth. Despite rising fears, he noted the Fed’s outlook doesn’t yet project a recession, though private forecasts are shifting fast.
Additional Key Developments:
- Cboe Volatility Index (VIX) soared to 45.31, highest since April 2020
- USD Index gained 0.7%, reversing Thursday’s losses
- Euro fell 0.69% to $1.1097
- Japanese yen weakened, with USD/JPY rising to 146.9
As markets grapple with the fallout, investors face critical questions about where to allocate capital—and how deep this correction may run.