Markets Plunge as Trump Tariffs Trigger Global Selloff

Market Snapshot

Historic declines swept through U.S. markets with the S&P 500 plummeting -5.97% to close at 5,611.85, the Dow Jones dropping -5.5% to 42,001.76, and the Nasdaq Composite falling -5.82% to 17,299.29. The Russell 2000 small-cap index has now entered bear market territory, down -12.03% year-to-date.

Volatility metrics exploded higher with the VIX1D surging an astonishing +142.06% to 81.89 while the VIX9D climbed +67.65% to 57.17, reflecting extreme market fear.

Notable movers included:

• Apple (AAPL): -7.29%
• Nvidia (NVDA): -7.36%
• Tesla (TSLA): -10.42%
• Chevron (CVX): -7.5%
• ExxonMobil (XOM): -6.6%

The S&P 500 now sits -17.42% below its February 2025 peak, marking its worst weekly performance since March 2020.

Bottom Line: Markets experienced a historic sell-off driven by escalating trade tensions with China, triggering panic selling across all sectors with particular pressure on technology and energy stocks.

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Pre-Market Pulse

Futures indicate continued market turmoil ahead of the opening bell:

• Dow futures: -4%
• S&P 500 futures: -4.93%
• Nasdaq 100 futures: -5.61%

Global markets are showing significant weakness:

• Japan's Nikkei 225 crashed -7.8% overnight
• Germany's DAX futures dropped -0.78%

Key pre-market movers:

• Tesla (TSLA): -8% on tariff concerns
• Bank of America (BAC): -6% amid recession fears

The U.S. dollar index has stabilized at 104.26 (+0.05%) after testing October lows, while 10-year Treasury yields plunged to 4.16% (-0.80bps) in a flight to safety.

JPMorgan economists have raised their recession probability to 60%, warning that tariffs could reduce GDP growth by 1 percentage point.

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Sector Spotlight

All 11 S&P sectors closed in negative territory, with dramatic underperformance in cyclical sectors:

• Energy: -8.5% (worst performer)
• Financials: -7.9%
• Technology: -6.8%
• Utilities: -3.1% (best relative performer)
• Consumer Staples: -4.2%

Within technology, semiconductor stocks faced intense selling pressure:

• Nvidia (NVDA): -7.36%
• AMD (AMD): -9.1%

The FANG+ index has plunged -9.7% monthly, with Meta (META) (-13.7%) and Nvidia (NVDA) (-13.2%) leading declines.

Energy stocks faced dual pressures from oil prices (-6%) and refining margin compression.

Bottom Line: Traditional defensive sectors (Utilities, Consumer Staples) outperformed but still declined significantly, indicating widespread risk aversion. Unusual correlation breakdowns emerged as traditional safe-haven assets like gold miners (-4.8%) fell alongside technology stocks, suggesting forced liquidations and margin calls rather than orderly repositioning.

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Economic Beat & Fed Watch

Key economic data points:

• Q4 2024 GDP: 2.4% (unchanged)
  • Actual: 2.4%
  • Prior: 2.4%
• Q1 2025 GDP Forecast: Slashed to 1.2% post-tariffs
• March Nonfarm Payrolls:
  • Actual: 228,000
  • Expected: 155,000
• Unemployment Rate: Steady at 4.2%
• Michigan Consumer Sentiment:
  • Actual: 57 (lowest since 2022)
• 1-year Inflation Expectations: Spiked to 5.1%

The Treasury yield curve has inverted further with the 2-10yr spread at -0.42%, signaling heightened recession concerns.

Manufacturing PMI input prices rose at the fastest pace since 2023, with S&P Global noting "US pricing power exceeding all 33 monitored economies."

Fed Governor Jefferson emphasized "heightened uncertainty" in spending and investment decisions despite solid labor markets.

Bottom Line: The economic data presents a concerning dichotomy – while employment remains robust, consumer sentiment has deteriorated significantly and inflation expectations are rising. The Fed now faces the difficult challenge of balancing inflation risks against growing recession concerns, complicated by the potential economic impact of escalating trade tensions.

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Corporate Central

Financial Sector Pressure

• JPMorgan (JPM) shares down -8.1% YTD ahead of earnings
• Wells Fargo (WFC) down -12.3% YTD
• Financial sector EPS expected to drop -22% YoY

Why it matters: Bank earnings will provide critical insights into credit quality, loan demand, and net interest margins as recession fears mount.

Tech Giants Under Pressure

• Apple (AAPL) fell -7.29% on supply chain and tariff concerns
• Nvidia (NVDA) dropped -7.36% as semiconductor stocks face heightened trade war risks
• Tesla (TSLA) plunged -10.42% with pre-market indicating further -8% decline

Why it matters: Technology companies with significant exposure to China face potential supply chain disruptions and margin pressure from tariffs.

Energy Sector Developments

• Chevron (CVX) fell -7.5% as oil prices collapsed
• ExxonMobil (XOM) dropped -6.6% amid demand destruction fears

Why it matters: Energy companies face dual pressures from falling oil prices and concerns about global demand slowdown, potentially impacting capital expenditure plans and dividend sustainability.

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Global Market View

China's announcement of 34% retaliatory tariffs has triggered an estimated $16 trillion global market cap erosion:

• EURO STOXX 600: -5.1%, entering bear market territory
• Nikkei 225: -7.8%, also in bear market
• Germany's DAX: -4.95%, with automakers like BMW (-11%) hardest hit
• France's CAC 40: -4.26%

Emerging markets experienced brutal outflows:

• India's Sensex: -5%
• Brazil's Bovespa: -8.2%

In commodities and currencies:

• Brent crude collapsed -6% to $83.34/barrel on demand destruction fears
• The Japanese yen strengthened +2.1% to 147/US$ as carry trades unwound
• The offshore yuan weakened -0.8%

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Market Spotlight: Trade War Escalation Triggers Global Selloff

The announcement of China's 34% retaliatory tariffs has sent shockwaves through global markets, triggering what analysts are calling a "panic deleveraging" event reminiscent of March 2020.

The escalation represents a significant departure from market expectations, with JPMorgan economists now warning that these tariffs could reduce U.S. GDP growth by a full percentage point.

Supply chain implications are particularly concerning for technology and manufacturing sectors, with semiconductor companies facing potential disruptions to their complex global production networks.

Market technicians note that the S&P 500's rapid 17.42% decline from its February peak has broken multiple support levels, with the next major support zone around 5,300.

The VIX term structure inversion (short-term volatility exceeding longer-term measures) suggests traders are pricing in continued turbulence rather than a quick resolution.

While some strategists point to strong employment data as a potential buffer against recession, the dramatic shift in consumer sentiment and rising inflation expectations complicate the Federal Reserve's policy options.

The key question now facing investors is whether this represents a buying opportunity or the beginning of a more prolonged market correction. The answer likely hinges on upcoming trade negotiations scheduled for April 8 and whether officials can de-escalate tensions.

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Analyst Actions

• Downgrade by Goldman Sachs to Neutral (from Buy) for Semiconductor Sector with multiple price target reductions. Rationale: Supply chain disruptions and potential export restrictions amid escalating trade tensions.
• Downgrade by Morgan Stanley to Underweight (from Equal-weight) for European Luxury Goods with Price Target reductions of 15-20%. Rationale: Significant exposure to Chinese consumer spending and potential retaliatory measures.
• Downgrade by JPMorgan to Neutral (from Overweight) for U.S. Banks with Price Targets reduced by average of 12%. Rationale: Increased recession probability and deteriorating credit quality metrics.

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Risk Radar

• Liquidity Crunch: The speed and magnitude of the selloff suggests potential forced liquidations and margin calls, which could amplify market moves regardless of fundamentals.
• Policy Error: Central banks face an increasingly difficult balancing act between fighting inflation and preventing recession, with limited policy tools remaining.
• Contagion Risk: The unusual correlation breakdown across asset classes indicates potential systemic stress that could spread to credit markets and private assets.

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Look Ahead: What to Watch For

• March CPI (April 10): Expected 0.3% MoM core; critical for Fed policy path
• FOMC Minutes Release (April 10): Will provide insights into Fed thinking before recent market turmoil
• Bank Earnings: JPMorgan and Wells Fargo kick off earnings season, with financial sector EPS expected to drop 22% YoY
• Trade Negotiations (April 8): Resumption of talks between U.S. and China, though White House officials have called China's retaliation "disproportionate"
• EIA Inventory Data: Energy traders await report amid collapsing contango in oil futures
• Fed's Kugler Speech (April 7): May provide clues on how the Fed views recent market volatility
• Australia's NAB Business Confidence (April 8): Early indicator for global sentiment
• Technical Levels: S&P 500 support at 5,300 will be closely watched

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In Summary: Markets are experiencing historic volatility as trade tensions between the U.S. and China escalate dramatically. The combination of tariff concerns, recession fears, and technical breakdowns has created a perfect storm for risk assets.

Investors should prepare for continued turbulence as markets digest these developments and await critical economic data and earnings reports in the coming days.

The path forward will largely depend on whether policymakers can de-escalate trade tensions and whether economic fundamentals remain resilient enough to prevent a deeper downturn.

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