The Nasdaq Composite entered a bear market and the Dow Jones Industrial Average sank 2,231 points on Friday after China said it would retaliate against the U.S. with 34% tariffs of its own.
The tech-heavy index sank 5.8%, closing more than 20% below its December record to put it in bear market territory. The S&P 500 fell nearly 6%, marking its largest daily decline since 2020 The Dow fell 5.5%, closing down 10% from its recent high to fall into a correction.
The CBOE Volatility Index surged to 41.
The Dow shed 2,000 points in a day for the fourth time in the index’s history.
All told, U.S. stocks shed some $6.6 trillion in market cap in the past two days based on preliminary figures, according to Dow Jones Market Data. That’s the largest two-day market cap slide for U.S. listed stocks on record.
Stocks fell even after the March update on employment came in better than expected. Peter Boockvar, an independent economist and market strategist, called it “the last jobs report before the global trade earthquake of April 2nd.”
In a subsequent note summarizing the week’s events, Boockvar led off his section of positive events with “1)The market is closed for the next two days.”
In the face of sinking stocks, market participants turned to bonds. Rising bond prices pushed the yield on the 2-year Treasury note down to 3.67%, its lowest level since September. The 10-year yield dropped back below 4% to 3.99%.
Wall Street strategists have been slashing expectations for the economy in the face of the tariffs. Ed Yardeni, president of Yardeni Research, now sees a 45% chance of a scenario that includes stagflation and a recession.
Yardeni argues investors are selling stocks in an attempt to send Trump a message on tariffs. He titled a Friday note: “Stock Vigilantes Declare: ‘Mr. President, Tear Down This Tariff Wall!’”
“If Trump doesn’t pivot, the Stock Market Vigilantes will continue to destroy more of the wealth of Americans, who are already calling their congressional representatives to complain that they are getting poorer, not wealthier,” Yardeni writes. “As a result, some of the Republicans are likely to join Democrats in an effort to reduce the power of the executive branch in setting tariffs.”
