S&P 500 Plummets 5% as Trump Tariffs Spark $3.5 Trillion Loss
1min read The S&P 500 experienced its largest two-day decline since 2020, resulting in a total market capitalization loss of $3.5 trillion. This significant drop was triggered by a series of events that sent shockwaves through the global markets. On Thursday, stocks plummeted, with the S&P 500 falling nearly 5% and the Nasdaq Composite dropping 6%. The Dow Jones Industrial Average also tumbled, losing almost 1,700 points, marking its fifth-worst decline in history. This dramatic sell-off was largely attributed to the announcement of new tariffs by President Donald Trump, which imposed a baseline rate of 10% on all US trading partners and additional duties on countries deemed "bad actors" on trade. The new tariffs, set to take effect on April 5 and April 9, impacted 185 countries and raised the effective US tariff rate to its highest level in over a century.
The tech sector was particularly hard hit, with megacap stocks such as apple and nvidia experiencing significant declines. Apple's shares fell over 9% due to concerns about disruptions to its supply chain, while Nvidia and other chip stocks also tumbled. The so-called "Magnificent Seven" stocks, which had led the market rally over the past two years, shed over $900 billion in market capitalization. Small-cap stocks were not spared, as the Russell 2000 index declined more than 6.4% to close in bear market territory. The 10-year Treasury yield fell about 14 basis points to close at 4.05%, its lowest level since October 2024. Meanwhile, the US dollar index tumbled 1.5% to 101.92, also its lowest level since October 2024.
The market reaction was swift and severe, with stocks around the world selling off as fears of a full-on trade war and a severe hit to global growth mounted. The likelihood of retaliation from trading partners fueled these concerns, leading to a global sell-off. The pan-European benchmark Stoxx 600 sank over 2.5%, while Japan's Nikkei 225 slumped 2.7% to its lowest level since August. The market's response to the tariffs was a stark reminder of the interconnected nature of global economies and the potential impact of trade policies on financial markets. The two-day decline in the S&P 500 highlighted the volatility and uncertainty that can arise from sudden policy changes, underscoring the need for investors to remain vigilant and adaptable in the face of such developments.
Ask Aime: How will the S&P 500's largest decline since 2020 affect global markets?
