President Trump’s escalation of a global trade war on Thursday fueled the worst stock market sell-off since the coronavirus pandemic, as investors worried that the steep tariffs imposed on America’s trading partners would push the economy into a downturn.
The S&P 500 fell almost 5 percent on Thursday, its worst showing since June 2020, when the world had been plunged into a health crisis that brought much of everyday life to a halt.
The index, which had already fallen five of the last six weeks, tipped into correction territory, which means it has declined more than 10 percent from its latest peak and which is a line in the sand for investors assessing the severity of a recent drop.
The tremors spread further than just stocks. Measures of inflation expectations jumped, intensifying fears of an economic slowdown and sending the dollar down against every currency of the Group of 10 nations. Investors rushed to the safety of government debt.
Thursday’s sell-off was an extraordinary moment in markets that, despite being prone to big swings, rarely react so strongly to an American president’s rollout of an economic policy.
Mr. Trump and his advisers shrugged off the market turmoil and predicted that stocks would eventually rebound.
