Stock market plummets on China tariff news

Dow drops 1800 points, Nasdaq enters bear market as Trump tariffs spark trade-war fears and market upheaval.

In Short

Wall Street faced major losses, with the Dow Jones plummeting 1,800 points due to escalating trade tensions and new tariffs from China.

Analysts now predict a 60% chance of recession as investor confidence wanes despite a strong jobs report.

On Friday, Wall Street experienced significant losses, with the Dow Jones dropping around 1,800 points and the S&P 500 declining by 5%. The Nasdaq entered bear market territory, marking a 20% decline from its peak.

Pressure from escalating trade tensions intensified as China announced a 34% tariff on U.S. imports, which sparked fears that a global trade resolution is unlikely.

Federal Reserve Chair Jerome Powell indicated that the U.S. economy may face higher prices and subdued growth due to the recent tariff increases.

The extensive selling activity highlighted the market’s reaction to the unexpected severity of the new tariffs. Over two dozen S&P 500 stocks fell by more than 10%, contributing to a market-wide loss exceeding $6 trillion over two days.

Analysts from JPMorgan raised their recession probability forecast to 60%, as investor sentiment soured and uncertainties grew.

Potential deals

Despite President Trump’s optimistic remarks about potential deals, he announced new tariffs on drugs and microchips, causing further apprehension.

A strong jobs report showing 228,000 new jobs did little to bolster investor confidence amid tariff-related uncertainties.

While U.S. indices opened lower, they experienced a modest recovery after reports of Vietnam’s interest in reducing tariffs.

European markets also suffered, dropping over 4%.

Investors have increased bets on interest rate cuts, and oil prices fell to their lowest levels since 2021. The dollar rebounded slightly but remains weak overall.