U.S. Stocks Plunge 5% as New Tariffs Spark Tech Sell-Off

On April 4th, the U.S. stock market faced a significant downturn, with all three major indexes experiencing substantial declines. The Dow Jones Industrial Average saw a preliminary drop of approximately 1700 points, indicating a notable shift in market sentiment. The S&P 500 Index decreased by 4.8%, while the Nasdaq Composite fell by nearly 6%. This decline was primarily driven by a sharp reduction in technology stocks, with major players like Apple (AAPL.O) witnessing a staggering 9% drop, resulting in an estimated loss of around $300 billion in market capitalization. Other notable declines included Amazon (AMZN.O) and Nvidia (NVDA.O), which fell by 8.9% and 7.8%, respectively. Interestingly, Intel (INTC.O) bucked the broader market trend with a 2% increase. In international markets, the Nasdaq Golden Dragon China Index also declined by 1.9%.

Apple's stock price plummeted by nearly 9% on Thursday, leading a broader sell-off in the U.S. stock market. This decline was triggered by the announcement of new tariff policies by the U.S. administration, which sent shockwaves through the tech sector and beyond. The tech-heavy Nasdaq Composite led the market downturn, falling by 6%, while the S&P 500 and Dow Jones Industrial Average also experienced significant declines, dropping by nearly 5% and 4% respectively. The Dow's point drop was one of the worst in its history, reflecting the severity of the market reaction.

The new tariff policies, which include a baseline rate of 10% on all U.S. trading partners and additional duties on countries deemed "bad actors" on trade, are set to go into effect on April 5 and April 9. These tariffs are expected to impact 185 countries and raise the effective U.S. tariff rate to its highest level in over a century. The administration's two-step approach to tariffs has raised concerns about potential retaliation from trading partners, fueling fears of a full-on trade war and a severe hit to global growth.

Apple, a key player in the tech sector, was particularly hard hit by the tariffs. The company's stock price fell by nearly 9% amid concerns about disruption to its supply chain, with China, the source of key iPhone components, facing additional U.S. tariffs that raised its overall rate to 54%. Other tech giants, including Nvidia, also experienced significant declines due to similar concerns. The so-called "Magnificent Seven" stocks, which have led the market rally over the past two years, shed over $900 billion in market capitalization.

The market sell-off was not limited to the tech sector. Small-cap stocks, as measured by the Russell 2000 index, also declined by more than 6.4%, closing in bear market territory. The 10-year Treasury yield fell by about 14 basis points to close at 4.05%, its lowest level since October 2024. Meanwhile, the U.S. dollar index tumbled by 1.5% to 101.92, also its lowest level since October 2024.

The administration downplayed the market reaction, with the President claiming that markets will eventually "boom." However, the likelihood of retaliation from trading partners and the potential for a full-on trade war have raised concerns about the impact on global growth. The market sell-off was not limited to the U.S., with stocks around the world also experiencing declines. The pan-European benchmark Stoxx 600 sank over 2.5%, while Japan's Nikkei 225 slumped 2.7% to its lowest level since August.

The tariff announcement has raised concerns about the potential impact on the U.S. economy and global growth. The administration's two-step approach to tariffs, which includes a baseline rate of 10% on all U.S. trading partners and additional duties on countries deemed "bad actors" on trade, is expected to impact 185 countries and raise the effective U.S. tariff rate to its highest level in over a century. The potential for retaliation from trading partners and the impact on global supply chains have raised concerns about the potential for a full-on trade war and a severe hit to global growth. The market sell-off, which was led by the tech sector, has raised concerns about the potential impact on the U.S. economy and global growth. The administration's downplaying of the market reaction has done little to allay these concerns, with the potential for a full-on trade war and a severe hit to global growth remaining a significant risk.