Technology stocks lead the decline, panic index breaks 40, Wall Street fears a bear market and recession storm
The U.S. stock market faced a significant decline for the second consecutive day, as China announced new tariffs on American goods, igniting concerns over an escalation of the global trade war. As investors worried that the Trump administration’s hardline stance could lead the global economy into recession, all three major stock indexes fell sharply, marking the worst decline since the outbreak of the COVID-19 pandemic.
Dow plunges over 2,200 points; U.S. stocks set record-breaking drops for two consecutive days
On Friday, the Dow Jones Industrial Average plummeted by 2,231.07 points, a drop of 5.5%, closing at 38,314.86 points, marking the largest single-day decline since the peak of the pandemic in June 2020. This marks the second consecutive day of significant drops for the Dow, which had already fallen by 1,679 points on Thursday, setting a historical record for the first time ever with two consecutive days of drops exceeding 1,500 points.
The S&P 500 index also suffered a severe decline of 5.97%, closing at 5,074.08 points, the worst single-day performance since March 2020. Over the two days, the index has dropped more than 10%, falling over 17% from recent highs, officially entering a technical correction zone.
The Nasdaq Composite Index also faced heavy losses, plummeting 5.8% to 15,587.79 points on Friday. This is nearly a 12% decline over two consecutive days, with a drop of over 22% from last December’s peak, officially entering bear market territory.
China imposes 34% retaliatory tariffs; U.S.-China tensions escalate
The primary cause of the market turbulence was China’s Ministry of Commerce announcing on Friday that it would impose retaliatory tariffs of up to 34% on all American goods, directly responding to the tariffs recently announced by the Trump administration. The market had initially hoped for some negotiating room between the two sides, but China’s actions clearly signaled a “hardline” approach, causing investor confidence to collapse.
Tech giants face severe declines; Apple and NVIDIA both see weekly drops exceeding 10%
The market sell-off on Friday was led by technology stocks. Apple’s stock fell by 7% in a single day, with a cumulative drop of 13% for the week. AI leader NVIDIA also dropped 7%, while Tesla saw a dramatic 10% decline. These three companies have significant business in the Chinese market and thus became direct victims of Beijing’s retaliatory tariffs.
Other companies highly dependent on exports to China faced similar fates. Boeing fell by 9%, and heavy machinery maker Caterpillar dropped nearly 6%, becoming the two main culprits dragging down the Dow.
Beijing escalates retaliatory measures, launching antitrust investigations against U.S. companies
China’s retaliatory actions did not stop at tariffs. On the same day, Beijing authorities placed several American companies on a “unreliable entity list,” citing violations of market rules or failure to fulfill contracts. Additionally, China initiated an antitrust investigation against American chemical giant DuPont, leading to a nearly 13% drop in DuPont’s stock price.
These actions further undermined market confidence and raised concerns among investors that the U.S.-China conflict has entered a phase of full-scale economic confrontation.
Panic spreads; funds flood into the bond market for safety
As market panic intensified, investors began to shift significantly into safe-haven assets such as government bonds. The yield on the 10-year U.S. Treasury bond fell below 4% on Friday, indicating a rapid influx of capital into the bond market. Meanwhile, the CBOE Volatility Index (VIX), which measures market fear, surged to over 40, a level typically only seen during extreme stock market crashes.
Trump maintains tariff stance; market fears further escalation over the weekend
Despite the brutal stock market declines over the past two days, former President Trump maintained a hardline stance. He posted on Truth Social on Friday, stating, “My policies never change.” Market experts worry that as the weekend approaches, the trade war may continue to escalate, with the U.S. showing no signs of backing down.
“What the market fears most is that this trade war will continue to worsen, and the U.S. has no room to maneuver,” said Jay Woods, Global Strategist at Freedom Capital Markets.
U.S. stocks face a bleak week; the worst weekly performance since the pandemic began
After a week of intense volatility, the S&P 500 index fell by as much as 9% for the week, marking the worst weekly performance since the onset of the COVID-19 pandemic in 2020. Investors are concerned that if the trade war continues to escalate, the global economy could fall into a prolonged recession, and the stock market bear market may have only just begun.
As Emily Bowersock Hill, CEO of investment firm Bowersock Capital Partners, stated, “This bull market is over, destroyed by ideology and self-destructive policies. Even if we may see a bottom in the short term, the long-term damage from the global trade war on the economy will be profound.”
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