U.S. stock market crashes: worst drop for Nasdaq and S&P 500 in four years
The trade tariffs announced by Donald Trump have triggered a sharp collapse in U.S. stock indices — investors did not anticipate such drastic measures and rushed to sell off assets.
On Thursday, April 3, the U.S. stock market experienced its steepest decline since 2020, according to Interfax-Ukraine.
The reason was new trade tariffs announced by former President Donald Trump. He stated that tariffs would be imposed on imports from several countries, including China, the EU, Japan, Vietnam, and Taiwan.
The minimum rate will be 10% starting April 5, with higher tariffs taking effect from April 9. The tariff for China will reach 34%, and for the EU — 20%.
Following these announcements, the Nasdaq index plummeted by 5.97%, the S&P 500 dropped by 4.84%, and the Dow Jones fell nearly 4%. This marks the worst performance since the pandemic-driven crash.
Investors were shocked by the news: the market had not priced in such an aggressive scenario. Shares of tech giants and retailers tumbled. Apple lost $300 billion in market cap, with its stock down 9.3%. Amazon (-9%), Nvidia (-7.8%), and HP (-14.7%) also saw major losses.
Companies dependent on Asian supply chains were hit hardest. Nike dropped by 14.4% due to reliance on Vietnamese factories. Dollar Tree (-13.3%), Walmart (-2.8%), and Target (-10.9%) also suffered significant declines.
The banking sector was not spared either: the KBW Bank index lost 9.9%, and Bank of America fell by 11.1%.
According to analysts, investors are more concerned about the economic consequences of the tariffs — rising prices, reduced consumer demand, and increased uncertainty — than the tariffs themselves.
Additionally, amid Trump's tariffs and growing recession fears, investors are quickly pulling out of risk assets, leading to a decline in the U.S. dollar exchange rate against the euro and yen; markets are increasingly factoring in the likelihood of an early monetary policy easing by the Federal Reserve.