Russell 2000 falls 6% to its lowest since December 2022.

Russell 2000 falls 6% to its lowest since December 2022.

The Russell 2000, a benchmark index for small-cap stocks, plummeted 6% on Thursday, April 4, 2025, reaching its lowest level since December 2022. This significant decline was part of a broader market sell-off triggered by President Trump's sweeping tariff announcement, which sent shockwaves through global financial markets.

The Russell 2000's drop of 6% was the worst single-day performance since June 2020. This decline was particularly notable as it followed a period of relative stability for the index, which had been relatively resilient compared to larger-cap indices. The index closed the day at 1,800 points, a level not seen since the end of 2022.

The sell-off was part of a broader market rout that saw the S&P 500 fall 4.8%, the Dow Jones Industrial Average tumble 1,679 points, and the Nasdaq Composite plummet nearly 6%. The magnitude of the sell-off was unprecedented, with only four worse days in the S&P 500's history occurring in March 2020 during the height of the Covid-19 pandemic.

The Russell 2000's decline was particularly striking given the index's performance over the past two years. Small-cap stocks had been a bright spot in the market, outperforming larger-cap stocks and contributing significantly to the broader market's rally. However, the tariff announcement from President Trump, which included a 10% minimum tariff on most imports and higher rates for certain countries, sent a wave of uncertainty through the market.

The tariffs, which are set to take effect on April 5 and April 9, have raised concerns about the potential impact on global trade and economic growth. Economists have warned that the tariffs could weigh heavily on global growth and reignite inflation, potentially leading to a recession.

In response to the sell-off, the 10-year Treasury yield fell to 4.05%, its lowest level since October 2024, reflecting investor concerns about the economic outlook. Meanwhile, the US dollar index tumbled 1.5% to 101.92, its lowest level since October 2024, as investors sought safer assets.

The impact of the tariffs has been felt across various sectors, with tech stocks, energy companies, and industrial stocks all experiencing significant declines. The "Magnificent Seven" tech stocks that led the market rally over the past two years shed over $900 billion in market cap, highlighting the broad-based nature of the sell-off.

Investors worldwide are closely monitoring the situation, with many expressing concern about the potential long-term impact of the tariffs on the global economy. As the tariffs take effect, the market will continue to react to new information and developments, with potential further volatility expected in the coming weeks.

In conclusion, the Russell 2000's 6% decline on Thursday was a stark reminder of the market's sensitivity to geopolitical risks and policy changes. The broader market sell-off underscores the potential for significant economic disruption and the need for investors to remain vigilant in their analysis and portfolio management.