NEW YORK: The sell-off in Wall Street stocks deepened in mid-morning trading Thursday, with the S&P 500 losing more than four percent following US President Donald Trump’s sweeping tariff announcement.
Trump’s broadly crafted new levies battered leading names in banking, technology, apparel and most other areas. Among the S&P 500’s 11 sectors, only consumer staples was solidly in positive territory, with the other 10 in the red or nearly flat.
Near 1510 GMT, the S&P 500 stood at 5,420.15, down 4.4 percent.
The Dow Jones Industrial Average dropped 3.7 percent to 40,644.74, while the tech-rich Nasdaq Composite Index plunged 5.7 percent to 16,591.55.
Wall Street steadies ahead of Trump’s tariff plans
The rout follows Trump’s “Liberation Day” tariff announcement in which he unveiled a broad swath of new levies affecting all US trading partners.
“Clearly what was announced was close to the worst-case scenario and markets were not prepared for that and are reacting accordingly,” said Angelo Kourkafas, senior investment strategist at Edward Jones.
Adam Sarhan of 50 Park Investments said the tariffs will reduce corporate earnings and could reignite inflation and prompt counter tariffs from US trade partners.
“Here you have a tremendous amount of uncertainty… and that’s why the market is heading for a bear market,” said Sarhan, who also thinks a US recession is likely at this point.
“The market is a forward-looking mechanism,” he said. “You typically have recessions after a bear market.”
But Sarhan believes in Trump’s plan, viewing US trade and budget deficits as unsustainable.
Especially hard-hit sectors included apparel, where Nike, Macy’s and Gap all suffered double-digit drops following large new levies on China, Malaysia and other countries that are home to textile infrastructure.
Apple, which relies heavily on Chinese manufacturers for its products, was another big loser, sinking 8.8 percent. Amazon fell 8.2 percent, while Nvidia lost 6.8 percent.
Jason Schenker of Prestige Economics said in a note that the Trump administration could later drop the levies after negotiations on trade or other political priorities.
“We see the Trump administration’s policies as a manifestation of outcome-focused economic Realpolitik rather than process-focused diplomacy,” Schenker said.
“Recession and stagflation risks are rising with tariff uncertainty,” he added.
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