US stocks plunged on Friday, continuing a sharp sell-off that has erased $2.5 trillion from markets this week. Investor fears over a deepening trade war intensified after China announced steep retaliatory tariffs, while comments from Federal Reserve Chair Jerome Powell added to economic uncertainty.
The Dow Jones Industrial Average (DJI) tumbled 4.7%, or roughly 1,900 points, putting the blue-chip index on track to close in correction territory. The S&P 500 (GSPC) sank 5.3%, heading for its worst week since 2020. The Nasdaq Composite (IXIC) plunged 5.4%, approaching bear market territory.
Market Movers:
- Tesla (TSLA) -11%: Tesla shares tumbled more than 11% as the intensifying trade war triggered a broad sell-off in risk assets. The electric vehicle giant has significant exposure to China, one of its largest markets, raising concerns about how Beijing's tariffs might impact future sales and production costs.
- Nvidia (NVDA) -8%: The semiconductor sector was hit hard, with Nvidia dropping over 8%. As a major supplier of AI and data center chips, the company's revenue streams are closely tied to global trade. Fears that escalating tariffs will disrupt supply chains and demand weighed heavily on investor sentiment.
- Nike (NKE) +4.3%: In contrast to broader market declines, Nike surged 4.3% after President Trump revealed he had spoken with Vietnam’s leader about potential tariff reductions. Vietnam is a key manufacturing hub for the sportswear giant, and a reduction in trade barriers could ease cost pressures on the company.
- DuPont (DD) -11.4%: Shares of DuPont sank 11.4% as China launched an anti-monopoly probe into the company’s operations within its borders. With new tariffs and regulatory scrutiny mounting, investors are concerned about the long-term outlook for US chemical manufacturers operating in China.
China’s Retaliation Escalates Trade War
Markets opened lower after China announced it would impose an additional 34% tariff on all US imports starting April 10, matching Trump’s tariff increases from earlier this week. This move fueled fears that the trade war could spiral into a prolonged economic standoff, potentially triggering a global recession.
Investor confidence was further struck as major US exporters, including Apple and Boeing, faced the brunt of the sell-off. The uncertainty surrounding supply chains and corporate earnings added fuel to the downturn.
Bond Market Signals Recession Risks
As equities tanked, investors flocked to safer assets. The yield on the 10-year Treasury note (TNX) dropped to 3.9%, its lowest level since September. Historically, falling bond yields signal growing economic pessimism, as investors anticipate weaker growth and potential Federal Reserve intervention.
Economists are warning that a prolonged trade war, combined with rising inflation from tariffs, could push the US economy into a recession. The latest jobs report, which showed a better-than-expected addition of 228,000 jobs in March, was largely overshadowed by broader economic concerns.
Looking Ahead
With markets facing their worst week since 2020, traders are bracing for more volatility. All eyes will be on upcoming earnings reports to gauge corporate sentiment amid escalating trade tensions. Additionally, any signs from the Federal Reserve on potential rate cuts could impact market direction in the coming weeks. Investors should prepare for continued uncertainty as geopolitical risks remain elevated. For now, caution dominates Wall Street as the economic outlook darkens.