All three major U.S. stock indexes suffered steep losses, forfeiting much of the previous session’s gains as growing concerns over the escalating Washington-Beijing trade face-off dampened optimism over upbeat economic data and U.S.-Europe trade negotiations.
After Trump announced a 90-day tariff reprieve on Wednesday, the S&P 500 surged 9.5%, the largest one-day percentage jump since October 2008. The tech-heavy Nasdaq soared 12.2%, notching its second-biggest daily gain on record.
Following the whipsaw of Wednesday’s bounce and Thursday’s selloff, the S&P 500 remained 7.1% below where it was just before the reciprocal tariffs were announced last week.
“Investors are still uncomfortable with it, because they don’t know what the end game is,” said Paul Nolte, senior wealth advisor at Murphy & Sylvest in Elmhurst, Illinois. “I think what we’re seeing, still, is investor concern about tariffs and that is pretty much front and center for everything.”
The Labor Department’s Consumer Price Index report showed the prices consumers pay for a basket of goods unexpectedly edged lower in March, with core price growth cooling down 2.8% year-on-year, coming within one percentage point of the Federal Reserve’s 2% inflation target. But the Fed’s path forward, in light of ongoing trade negotiations, is less clear. Fed Governor Michelle Bowman said on Thursday that while the U.S. economy remains strong, the effects of Trump’s trade policies are unclear, while Chicago Fed President Austan Goolsbee said rate cuts could resume once the uncertainties surrounding trade policy is resolved.
In response to Trump’s 90-day tariff pause, the European Union will delay retaliatory levies on American goods as countries within the bloc scramble to reach trade deals with Washington, said European Commission chief Ursula von der Leyen.
But the trade war with Beijing persists, with China vowing to “follow through to the end” if the U.S. does not let up.
The CBOE Market Volatility Index, often called the “fear index,” remained elevated, but closed off the session high of 40.86.
“It’s hard for investors to feel comfortable about buying stocks with volatility so high,” Nolte added.
The Dow Jones Industrial Average fell 1,014.79 points, or 2.50%, to 39,593.66. The S&P 500 lost 188.85 points, or 3.46%, at 5,268.05 and the Nasdaq Composite dropped 737.66 points, or 4.31%, to 16,387.31.
Among the 11 major sectors in the S&P 500, all but consumer staples ended in negative territory, with energy and tech suffering the largest percentage drops.
Big Tech came under pressure once again, with each of the so-called Magnificent Seven group of artificial intelligence-related momentum stocks down between 2.3% and 7.3%.
CarMax slid 17.0% after the used-car retailer missed fourth-quarter profit expectations.
First-quarter earnings season kicks off on Friday with big banks, including JPMorgan Chase, Morgan Stanley and Wells Fargo due to report.
Declining issues outnumbered advancers by a 4.81-to-1 ratio on the NYSE. There were 39 new highs and 224 new lows on the NYSE.
On the Nasdaq, 867 stocks rose and 3,588 fell as declining issues outnumbered advancers by a 4.14-to-1 ratio.
The S&P 500 posted no new 52-week highs and nine new lows while the Nasdaq Composite recorded 13 new highs and 166 new lows.
Volume on U.S. exchanges was 23.65 billion shares, compared with the 18.50 billion average for the full session over the last 20 trading days.
