Investors flee equities as S&P 500 enters correction and China faces 54% effective tariff rate
US stocks posted their worst losses since 2020 after US President Donald Trump announced sweeping tariffs, fuelling fears of a global trade war and raising the risk of recession, according to CNBC.
The S&P 500 fell 4.84 percent to 5,396.52, its largest single-day drop since June 2020, sending the index back into correction territory—defined as a decline of 10 percent or more from recent highs.
The benchmark now sits around 12 percent below its February record. More than 400 of its constituents posted losses.
The Nasdaq Composite slid 5.97 percent to 16,550.61, recording its worst decline since March 2020.
The Dow Jones Industrial Average dropped 1,679.39 points, or 3.98 percent, to close at 40,545.93, also marking its worst day since June 2020.
The tariff announcement triggered a risk-off reaction across equities, with investors turning to bonds in search of safety. The yield on the 10-year Treasury fell to as low as 4 percent as bond prices rose.
Multinational and consumer-facing US companies saw steep declines. Nike dropped 14 percent and Apple fell 9 percent.
Retailers that rely heavily on imported goods also suffered, with Five Below plunging nearly 28 percent, Dollar Tree tumbling 13 percent, and Gap declining 20 percent.
Technology stocks retreated amid the broad sell-off. Nvidia fell nearly 8 percent, while Tesla dropped more than 5 percent.
The US administration said the baseline tariff rate of 10 percent on all countries would go into effect April 5. Additional duties targeting nations that impose higher tariffs on the US will follow.
Traders had expected a 10 to 20 percent cap, not a starting point.
CNBC reported that for countries such as China, the effective tariff rate will now be 54 percent when factoring in existing levies and the new reciprocal rate.
Trump acknowledged Thursday’s market decline and compared the situation to a medical procedure, saying “The markets are going to boom. The stock is going to boom. The country is going to boom. And the rest of the world wants to see is there any way they can make a deal.”
He added that tariffs are like “an operation, like when a patient gets operated on.”
Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, told CNBC the tariffs caught markets off guard.
“This was the worst case scenario for tariffs and [they] were not priced-into the markets, which is why we are seeing such a risk-off reaction,” she said.
“The big question is if 5,500 can hold on the S&P 500. If it cannot hold, we may see another 5–10 percent downside, which could likely point to a bottom of 5,200–5,400.”
The market has struggled since late February amid ongoing tariff uncertainty, with the S&P 500 falling into correction territory.
CNBC noted that weakening economic data has begun to reflect the impact, increasing fears of a US recession.
JPMorgan economists said a recession is now likely if the new tariff rates remain in place and are not lowered through negotiation.
