At 12.53 pm, the Dow Jones dropped 1,607.09 points or 3.96% to 38,938.84, the S&P 500 declined 258.10 points or 4.78% to 5,138.49, and the Nasdaq fell 817.82 points or 4.94% to 15,732.78.
China’s finance ministry said on Friday it would impose additional tariffs of 34% on all U.S. goods from April 10 after U.S. President Donald Trump raised tariff barriers to their highest level in more than a century this week.
The tariff war has sent shockwaves through global financial markets and raised fears of an economic downturn, with investment bank JP Morgan forecasting a 60% chance of the global economy entering a recession by year-end, up from 40% previously.
The Nasdaq Composite shed 20% from its all-time closing high touched in December. If the index closes below that mark, it would confirm a bear market.
The S&P 500 and the Nasdaq were poised to mark their biggest weekly drop since March 2020, and the Dow was on course for its biggest weekly decline since October 2020. “Recession risk is a significant concern here. Tariffs could wipe out growth and markets are reflecting that. This bull market picture that we had in front of us is now being completely rewritten,” said Dana D’Auria, co-chief investment officer at Envestnet. Wall Street’s main indexes posted their biggest single-day percentage declines in years on Thursday after Trump imposed a 10% tariff on most imports into the United States and much higher levies on dozens of other countries.
Investors have shunned riskier assets including stocks and commodities in recent weeks on bets that the tariffs will spark an economic slowdown, prompting them to seek safer assets such as government bonds and gold.
Federal Reserve Chair Jerome Powell on Friday highlighted that Trump’s unexpectedly hefty tariffs could trigger higher inflation and slower growth, setting the stage for challenging decisions ahead for the central bank.
Traders continued to anticipate a more accommodative policy from the U.S. central bank, with money market futures pricing in cumulative rate cuts of 100 basis points by the end of this year, compared with about 75 bps a week earlier.
U.S.-listings of Chinese companies dived, with JD.com and Alibaba and Baidu shedding over 9% each.
Companies with exposure to China also fell across the board, with mega-caps such as Apple falling 4.7%.
The CBOE Volatility index, known as Wall Street’s fear gauge, hit its highest level in eight months at 34.71 points.
U.S. bank stocks dropped further on Friday, with the sector under pressure globally, as investors anticipated more interest rate cuts from central banks and a hit to economic growth from tariffs.
The yield on the benchmark 10-year Treasury notes was down to a six-month low of 3.938%.
A Labor Department report showed the U.S. economy added far more jobs than expected in March, but Trump’s sweeping import tariffs could test the labor market’s resilience in the months ahead amid sagging business confidence.
Declining issues outnumbered advancers by an 8.82-to-1 ratio on the NYSE and a 6.38-to-1 ratio on the Nasdaq.
The S&P 500 posted 10 new 52-week highs and 138 new lows while the Nasdaq Composite recorded 11 new highs and 946 new lows.
