The stock market marked its worst day since 2020 after the White House unveiled its plans for steep tariffs that will upend the global economy.
The S&P 500 sank 4.8%. The Nasdaq Composite slid 6%. The Dow Jones Industrial Average fell 1,679 points, or 4%. All three indexes finished with their largest daily declines since 2020, according to Dow Jones Market Data.
Overall, U.S. stocks lost $3.1 trillion in market cap, the largest decline for stocks listed on major U.S. exchanges since March 16, 2020, when $3.5 trillion in value was wiped out, according to Dow Jones Market Data.
The yield on the 2-year Treasury note fell to 3.72%. The 10-year yield fell to 4.05%. Bonds and consumer staples were among the few safe havens for investors on Thursday. Health care, telecoms, and utilities also held up far better than consumer discretionary, energy, and tech.
President Donald Trump’s plans for broad 10% tariffs paired with higher rates for many key trade partners caught Wall Street off guard. Along with hammering firms that import physical goods to the U.S., the tariffs have the potential to spark price growth. Recession worries were also on the rise on Thursday.
“The Trump administration may be playing a game of chicken with trading partners, but market participants aren’t willing to wait around for the results,” says SPDR Chief Investment Strategist Michael Arone. “Instead, investors are selling first and asking questions later. If, and it’s a big if, Trump’s reciprocal tariffs result in lower overall global trade barriers, risk assets will rebound swiftly. But if our trading partners retaliate and pursue countermeasures, economic growth will plunge and markets likely will too.”
The CBOE Volatility Index, or VIX, spiked and was nearing a level of 30, signaling higher anxiety in markets.
“Yesterday’s Liberation Day festivities in the Rose Garden set off a freefall in stock prices on increasing fears of a trade war,” writes Ed Yardeni, president of Yardeni Research. “The worst-case scenario is a recession if high tariff rates stick, leading to a slowdown in business and consumer spending that cause layoffs.”
Riskier stocks, members of the Magnificent Seven including Apple, and small-caps were also some of the biggest laggards on Thursday. The Russell 2000 closed in bear market territory.
“The market reaction to the tariffs does not come as a surprise given the scope and magnitude of the levies, combined with the equity market’s increasingly vulnerable condition,” says Jordan Rizzuto, chief investment officer at GammaRoad Capital Partners. “These inflections towards heightened market risk have coincided with extreme valuation and concentration by almost any historical metric. The dry tinder was already there, and this policy announcement has provided the spark.”
