U.S. stocks suffered their worst week since the COVID-19 recession, as sell-offs deepened and broadened—touching nearly every sector and stock.
The S&P 500 ended April 4 at 5,074, down 9.08 percent for the week. The Dow Jones Industrial Average dropped by 7.86 percent to close at 38,314. The Nasdaq fell by 10.02 percent to end the week at 15,587. Meanwhile, the small-cap Russell 2000 declined by 9.7 percent to finish at 1,827.
Trade had begun positively early in the week as bargain hunters returned to the market, shaking off a couple of mixed reports on the U.S. economy.
The report also showed that the prices paid index soared to 69.4, up from 62.4 the prior month and ahead of market expectations of 64.6. This was the highest reading since June 2022, signaling rising costs for U.S. companies and further confirming that inflationary pressures are creeping back into the economy.
Things took a sharp turn on the afternoon of April 2, after Washington announced its new reciprocal tariff regime. Tariffs on Vietnamese and Chinese products were set at 46 percent and 34 percent, respectively.
Markets tend to react negatively to tariffs, as they raise concerns about deglobalization or the fragmentation of global trade.
For these companies, deglobalization is expected to squeeze earnings in two ways: on the cost side, as they face higher prices for imported products from countries such as Vietnam and China, and on the revenue side, as elevated prices and a slowing economy impact sales.
In addition, shares of the Magnificent Seven, including Tesla, Apple, and Nvidia, which have a significant presence in China, were sold off because of fears of Beijing’s retaliation.
The sell-off deepened and broadened on April 4 as China matched U.S. tariffs.
The sell-off on April 4 also hit McDonald’s and Berkshire Hathaway, which had been spared the previous day.
Glen Smith, chief investment officer of Flower Mound, Texas-based GDS Wealth Management, with $1.2 billion in assets, was encouraged by the news.
“It shows that the economy is still creating jobs at a robust pace even with the tariff uncertainty and Federal job cuts, and job growth is arguably the most important economic indicator,” he told the Epoch Times.
However, he noted that the jobs data is retrospective and doesn’t indicate how employers might perform in the coming months.
Smith said that, even with the stock market breaking below its mid-March low, it remains within the bounds of a typical market correction.
“Stock market corrections tend to be quick on the way down and quick on the way up, and we believe investors should be looking for buying opportunities,” he said.
Emily Bowersock Hill, CEO and founding partner of Bowersock Capital Partners in Lawrence, Kansas, expressed concerns about tariff retaliation by other countries. Her firm has lowered its year-end target for the S&P 500 from 6,000 to 5,700.
John Zolidis, equity analyst and president of Quo Vadis Capital, believes that the media has exaggerated the impact of tariffs on financial markets.
“Recall that the business model of media is to drive engagement. Engagement increases when there is something new, especially something new and scary,” he wrote in an email to his subscribers. “It, therefore, shouldn’t surprise you that coverage of the tariffs is focused on amplifying basic human emotions.”
