Updated: Wall Street Suffers Worst Drop Since 2020 Pandemic

3 Apr at 4:37 pm

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Updated: Wall Street Suffers Worst Drop Since 2020 Pandemic \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Wall Street endured its steepest decline since the onset of COVID-19 after President Donald Trump unveiled sweeping new tariffs. The S&P 500 plunged 4.8% amid global fears of economic slowdown and inflation, with all major indexes and asset classes hit hard. Investors are bracing for recession risks as Trump’s trade strategy disrupts global stability.

Wall Street Panic – Quick Looks

S&P 500 Plunges 4.8%: Its worst single-day drop since March 2020.
Dow Falls 1,679 Points: A 4% decline wipes out recent gains.
Nasdaq Crashes 6%: Tech stocks lead the retreat as uncertainty surges.
Russell 2000 Enters Bear Market: Small-cap index drops 6.6%, down over 20%.
Trump’s Tariffs Unveiled: 10% minimum, higher rates on EU, China.
UBS Warns of 2% GDP Hit: Inflation could spike to 5% under new tariffs.
Global Markets Recoil: Sharp declines in Asia and Europe follow suit.
Safe Havens Wobble Too: Even gold fell amid widespread sell-offs.
Fed Rate Cuts Eyed: Treasury yields tumble on recession fears.
Corporate Carnage: Best Buy, Target, United Airlines all plunge double digits.

Deep Look

On Thursday, Wall Street experienced a historic market collapse, unleashing levels of volatility and fear not seen since the early days of the COVID-19 pandemic. The sell-off came just hours after President Donald Trump unveiled a sweeping series of new tariffs aimed at reshaping global trade—a move that instead sent financial markets worldwide into panic.

The S&P 500 plunged 4.8%, the Nasdaq collapsed by 6%, and the Dow Jones Industrial Average lost 1,679 points, as investors raced to adjust their portfolios in anticipation of slowing growth, rising inflation, and the growing likelihood of a recession.

While Wall Street was prepared for a tough announcement, few expected the scale and aggressiveness of the president’s “Liberation Day” tariff package, which applied a minimum 10% tax on all imports and targeted specific nations with levies ranging up to 34%.

A Shock to Global Confidence

Global markets mirrored the chaos on Wall Street:

France’s CAC 40 lost 3.3%
Germany’s DAX fell 3%
Japan’s Nikkei dropped 2.8%
Hong Kong’s Hang Seng slipped 1.5%
South Korea’s Kospi declined 0.8%

These losses represented not just regional distress, but a universal vote of no-confidence in Trump’s strategy, which many economists warn could choke global trade, raise consumer prices, and shatter supply chains still recovering from pandemic-era disruptions.

Investors dumped everything—stocks, bonds, gold, oil—as panic set in. The sell-off reflected not just concern about short-term earnings but also about deep structural damage that protectionist trade policies could inflict on a global economy built on openness and interdependence.

Markets Underestimated Trump’s Intentions

For months, many on Wall Street had assumed Trump’s tariff threats were strategic posturing—a way to pressure trade partners into renegotiating deals. Thursday’s announcement shattered that belief. Instead of moderation, the administration embraced tariffs as a core ideological solution to what it sees as decades of U.S. economic decline due to unfair trade practices.

“This is not poker,” said Mary Ann Bartels, Chief Investment Officer at Sanctuary Wealth. “This is a wholesale restructuring of how the U.S. will engage with the global economy.”

Trump framed the move as a way to “bring jobs home,” describing it as a necessary but painful economic operation—a metaphor he repeated as markets crashed.

“I said this would exactly be the way it is,” he told reporters en route to Florida. “We have an operation, like when a patient gets operated on and it’s a big thing.”

Inflation Fears and Recession Warnings Mount

Economic think tanks like UBS wasted no time revising their forecasts. Their analysts now warn the tariffs could reduce U.S. GDP by up to 2% this year and push inflation near 5%, a dangerous level that would reawaken stagflation fears—a toxic combination of stalled economic growth and rising prices.

“Markets may actually be underreacting,” said Sean Sun of Thornburg Investment Management. “If these tariffs hold, the knock-on effects to global consumption and trade are massive.”

The Fed’s Tightrope

Investors quickly turned their attention to the Federal Reserve, hoping for a potential interest rate cut to soften the blow. Yields on U.S. Treasurys plunged, with the 10-year Treasury yield dropping to 4.04% from 4.20%—a dramatic move in bond markets and a sign of growing fear.

But the Fed is caught in a bind: cutting rates might support growth but exacerbate inflation—especially if tariffs keep pushing up prices for imported goods.

“The Fed’s tools may not be enough to fight this kind of crisis,” noted Bhanu Baweja of UBS. “It’s an external shock—part economic, part political, and part psychological.”

Corporate Carnage Across Sectors

The fear translated directly into corporate losses:

Best Buy plunged 17.8%, due to worries that global electronics supply chains would spike in cost.
United Airlines dropped 15.6%, as fears of falling travel demand took hold.
Target fell 10.9%, with analysts warning that consumers under inflationary stress would reduce discretionary spending.

Even tech giants were not immune. With global chip supplies at risk and overseas sales under pressure, shares of companies like Apple, Nvidia, and Amazon all recorded steep declines.

The Russell 2000 Enters Bear Market

The Russell 2000, which tracks smaller U.S. companies that often lack the global buffers of multinational firms, plunged 6.6%, putting it more than 20% below its previous record—the technical definition of a bear market.

This was seen as a worrisome signal: smaller businesses are typically more vulnerable to domestic economic shocks, and their swift decline suggests Main Street may soon feel Wall Street’s pain.

Geopolitical Ramifications and Diplomatic Fallout

Trump’s tariff package was especially pointed toward traditional allies:

Europe was slapped with a 20% tariff, despite years of NATO partnership.
Japan and South Korea, key U.S. allies in Asia, were hit with 24–25% tariffs.
China, still embroiled in disputes with the U.S., was assigned a 34% rate.

The diplomatic blowback has been swift. The European Commission signaled possible retaliatory tariffs on U.S. goods, with some calling for a coordinated Western response to protect multilateral trade norms.

China and India, meanwhile, remained measured but firm, suggesting that if these tariffs endure, they will respond in kind, potentially escalating the conflict into a global trade war.

Is This the Start of a Broader Crisis?

Despite strong job numbers and steady economic growth in recent quarters, markets are now confronting the reality that an engineered slowdown may be underway.

“This feels like the beginning of something much deeper,” said economist Erica Gurney of Yale’s Budget Lab. “If tariffs become entrenched, we’re not just looking at a market correction—we’re looking at an economic restructuring with global ripple effects.”

At the heart of the crisis is uncertainty—not just about numbers, but about Trump’s endgame. Is this a negotiation tactic that will evolve? Or a sign that the United States is retreating from its post-WWII leadership role in global trade?