Markets Plunge Sharply as Trump Tariffs Trigger Worst Stock Sell-Off Since 2020
April 3, 2025 — The U.S. stock market experienced a severe downturn on Thursday, marking the worst day for major indexes since the early days of the COVID-19 pandemic. Investors reacted strongly to President Donald Trump’s announcement of sweeping reciprocal tariffs against nearly all U.S. trading partners, sparking fears of heightened inflation, slowed economic growth, and disruptions to global supply chains.
Major Indexes Suffer Steep Declines
The Dow Jones Industrial Average plunged nearly 1,700 points—a 4% drop—while the S&P 500 lost 4.8% and the tech-heavy Nasdaq Composite tumbled 6%, closing near their session lows. These declines represent the largest one-day losses for the Dow and S&P 500 since June 2020, and the worst for the Nasdaq since March of that year.
The markets had closed higher during regular trading on Wednesday, with the S&P 500 gaining for the third consecutive day. However, following President Trump’s tariff announcement late Wednesday afternoon, heavy selling surged in after-hours trading and accelerated through Thursday.
Details of the Tariffs and Market Reaction
President Trump declared a plan imposing a minimum 10% reciprocal tariff on imports from nearly all countries, targeting 60 nations specifically with tariffs equivalent to half the rate those countries allegedly impose against American goods through tariffs and other trade barriers. This measure affects America’s largest trading partners, including the European Union, Japan, and China, and threatens to deepen global trade conflicts.
The possibility of a trade war revival and its inflationary implications spooked investors. BNP Paribas Asset Management’s Chief Market Strategist Daniel Morris described the announcement as “worse than most investors expected,” emphasizing uncertainty over whether negotiations on these tariffs could still occur.
Sector-Specific Impact Highlighted
Retailers with significant foreign sourcing suffered heavy hits. Nike shares fell 14%, Best Buy dropped 18%, Target slid 11%, and Dollar Tree declined 13%. Apparel and footwear companies including Williams-Sonoma, Ralph Lauren, and Deckers Outdoor each lost about 15%.
Mega-cap technology firms also tumbled amid concerns over supply chain costs. Apple fell over 9%, Nvidia and Broadcom declined 8% and 11% respectively, and major tech names such as Amazon, Meta Platforms, Tesla, Microsoft, and Alphabet recorded losses between 5% and 9%.
Dell Technologies and HP Inc. faced steep drops, sliding 19% and 15% respectively, while memory chip manufacturers Micron and Microchip Technology each declined more than 16%.
Financial service stocks declined sharply amid recession fears—Bank of America and Citigroup were down over 11%, with American Express, Goldman Sachs, and Morgan Stanley each dropping around 9-10%.
Treasury Yields and Commodities React
The yield on the 10-year Treasury note fell to 4.04% from 4.20% late Wednesday, reflecting growing economic uncertainty. Lower yields generally translate into lower borrowing costs, especially for mortgages, which were closely watched by market participants.
Bitcoin dropped from approximately $88,000 Wednesday to around $82,400 Thursday afternoon as investors fled riskier assets. Crypto-related stocks such as MicroStrategy and Coinbase also plunged.
Gold futures declined 0.9% to $3,140 an ounce after hitting record highs recently, while West Texas Intermediate crude oil futures dropped 7.1% to $66.60 per barrel amid trade war concerns and an accelerated increase in oil production from producing countries.
Bright Spots Amid Market Turmoil
Certain defensive sectors outperformed despite the overall market sell-off. Lamb Weston Holdings, a supplier of frozen potato products, jumped 10% after beating sales and profit expectations for its fiscal third quarter, with notable support from activist investor Jana Partners.
Healthcare insurers Molina Healthcare, Centene, and Elevance Health gained between 5.4% and 7.5%. Discount retailer Dollar General advanced nearly 5%, benefiting from its positioning as a low-cost option amid an economic slowdown.
Weekly Market Performance and Outlook
Prior to Thursday’s dramatic declines, the major U.S. indexes had been in positive territory for the week. However, the losses driven by tariff concerns put the S&P 500 and Nasdaq Composite on pace for weekly declines for six of the past seven weeks, down approximately 3.3% and 4.5% respectively through Thursday’s close. The Dow is set for its fifth weekly loss in seven weeks, down 2.5% for this period.
Year-to-date, the Dow has retreated 4.7%, the S&P 500 is down 8.3%, and the Nasdaq has plunged 14%. The ongoing market volatility underscores investor anxiety about the broader economic impact of protectionist trade measures introduced by the administration.
By Stephen Wisnefski
Executive Editor of News at Investopedia
April 3, 2025
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