US stocks fell sharply on Thursday, as fears of an economic and global trade war were stoked by President Donald Trump’s latest tariffs.
S&P 500 dropped more than 4%. This was its worst day in September 2022, and it pushed the index back into correction.
Investors scrambled as they tried to gauge the impact of new trade policies. The Dow Jones Industrial Average dropped 1,500 points or 3.6%. Meanwhile, the Nasdaq Composite plunged 5.5%.
Tariffs announced on Wednesday impose an initial 10% tax on all imports. However, rates are significantly higher for major trading partners – 54% for China and 20% for European Union.
Apple and Nike are the worst-hit tech stocks
The market collapse was largely caused by multinational corporations that have significant exposure to imported goods.
Apple, who manufactures the majority of iPhones in China fell by 8.7%. Amazon, Meta Platforms, and Meta Platforms also suffered losses, falling 8.8% each.
HP Inc. has suffered a 16% drop, one of the biggest in its sector.
Wedbush Analyst Dan Ives stated that the tech stock market “will be clearly under pressure after this announcement due to the concerns about supply chains and the China/Taiwan part of the tariffs.”
The retail sector also saw a sharp drop in sales, with higher tariffs threatening profit margins as well as consumer spending.
Nike fell 12% while Dollar Tree, Five Below, and Dollar Tree all dropped by 8% or 29%.
In the fiscal year 2020, Nike will produce about 28% of its clothing and footwear in Vietnam.
Lululemon Athletica and Deckers Outdoor have fallen 13% and 17% respectively. Both companies rely heavily upon Asian manufacturing.
Fears of an economy slowdown, and weaker lending terms sent bank stocks lower.
Bank of America dropped 9.3%. JPMorgan Chase fell 6.5%. And Wells Fargo went down 8%.
Semiconductor stocks and EVs struggle despite White House promises
Even though the White House clarified that Taiwan will be exempted from new tariffs for semiconductors, the chipmakers saw steep drops.
Nvidia dropped 5.2%. Advanced Micro Devices fell 5%. Qualcomm fell 6.7%.
Tesla reversed its course after rallying on Wednesday following reports that Elon Musk could step down from his role as government advisor. The stock fell 5.7%.
After a sharp 13% drop in deliveries for the first quarter, which was far below analyst’s expectations, there has been pressure on this electric car maker.
Analysts warn that the market will slip into the 5,200-5400 range if volatility continues.
This steep drop in prices has intensified fears that the US is headed for a recession.
S&P 500 is down by more than 10% since its peak.
Analysts warn of an eventual further drop to the range 5,200-5400. Investors closely monitor whether the index is able to hold at the crucial 5,500-level.
Mary Ann Bartels is the chief investment strategist of Sanctuary Wealth. She said, “The worst case scenario has come to pass, and markets weren’t prepared.”
This has caused a risk-off response, and we may see another 5- 10% downside if the support levels do not hold.”
CBOE Market Volatility Index, widely regarded as Wall Street’s fear gauge (VIX), soared to 27 in response to the increased uncertainty that has gripped financial markets.
Investors will be looking at the US Nonfarm Payrolls Report on Friday, as the selling continues to intensify. This report could provide further insight into the economy and Federal Reserve policy.
The post US Stock Market Drops As Trump’s Tariffs Rumble Investors; Analysts See S&P500 Sliding to 5,200-5400 will be updated as new information becomes available.
