Wall Street Suffers Worst Selloff in 18 Months as Trump Tariffs Spook Investors

Market Snapshot

U.S. markets experienced a severe selloff, with the S&P 500 plunging -4.84% to 5,396.59, the Dow Jones falling -3.98% to 40,546, and the Nasdaq tumbling -5.97% to 16,551. The Russell 2000 was hit hardest, crashing -6.59% and officially entering bear market territory (down -21.5% from its November 2024 high).

The VIX fear gauge surged 39.56% to 30.02, reflecting widespread panic. Meanwhile, the 10-Year Treasury Yield dropped 14 basis points to 4.0436% as investors sought safety.

• Top Decliners: Jayud Global Logistics (JYD) -95.66%, Newsmax (NMAX) -78.11%, ReShape Lifesciences (RSLS) -71.70%
• Most Active: Digital Ally (DGLY) with 1.22B shares traded, Damon (DMN) with 702.6M shares
• Notable Movers: Nike (NKE) -14.4%, RH (RH) -40%, Lamb Weston (LW) +10%

Bottom Line: President Trump's "Liberation Day" tariff announcements triggered a massive risk-off selloff, erasing approximately $2 trillion in market value from the S&P 500. Interestingly, Consumer Staples bucked the trend (+0.69%) amid defensive rotation, while gold hit a record high of $3,137.70 per ounce despite the equity carnage.

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Pre-Market Pulse

After yesterday's bloodbath, markets are showing signs of stabilization in pre-market trading, with S&P 500 futures down just -0.06% and Nasdaq futures slightly positive at +0.05%. However, several major stocks continue to face pressure:

• Apple (AAPL) down -7.59% pre-market on concerns about tariff impacts on its China-dependent supply chain
• Tesla (TSLA) falling -5.88% after reporting 336,000 deliveries, its lowest quarterly figure since 2022
• Diageo (DEO) rising +4.6% as alcohol products avoided the worst-case tariff scenario
• AstraZeneca (AZN) up +3.86% on hopes that pharmaceutical products might receive tariff exemptions

Global markets are still digesting yesterday's U.S. selloff, with Japan's Nikkei down -1.85% and Australia's ASX 200 futures falling -1.19%. WTI crude continues its decline, down -6.26% to $66.62 per barrel.

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Sector Spotlight

Thursday's selloff was broad-based but particularly devastating for cyclical and trade-sensitive sectors:

• Energy: -7.51% (worst performer, hammered by plunging oil prices)
• Information Technology: -6.86% (supply chain disruption fears)
• Consumer Discretionary: -6.45% (tariff exposure and recession concerns)
• Industrials: -5.41% (global trade disruption worries)
• Financials: -5.01% (recession fears and yield curve flattening)

Defensive sectors demonstrated relative resilience:

• Consumer Staples: +0.69% (only sector in positive territory)
• Utilities: -0.79% (outperforming amid flight to safety)

Within sectors, company-specific tariff exposure created dramatic divergences. Nike (NKE) plummeted -14.4% due to its significant Vietnam manufacturing footprint, while luxury retailer RH (RH) crashed -40% after missing earnings guidance. Bucking the trend, Lamb Weston (LW) surged +10% on strong earnings that overshadowed market concerns.

Bottom Line: The sector rotation clearly signals investors' rush toward defensive positioning and away from companies with significant international supply chain exposure. This pattern suggests markets are pricing in not just trade disruption but potential recession risk.

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Economic Beat & Fed Watch

Bond markets staged a dramatic rally as investors sought safety, with the 10-Year Treasury Yield dropping 14 basis points to 4.0436%. This flight to quality reflects growing recession concerns following the tariff announcements.

• Fed Funds Futures are now pricing in 96 basis points of cuts by December 2025
• Market-implied probability of aggressive rate cuts has doubled since the tariff announcement
• All eyes on today's March NFP Report (8:30 AM ET)
  • Consensus Expectation: 135,000-140,000 jobs added
  • Prior: 275,000 (February)
• Fed Chair Powell speaks today at 11:25 AM ET – markets will scrutinize his comments for any shift in tone regarding inflation vs. growth risks

Bottom Line: The economic narrative has rapidly shifted from "inflation concerns" to "growth fears" in just 24 hours. Today's jobs report and Powell's speech take on heightened importance as markets reassess whether the Fed might need to accelerate rate cuts to counter potential economic damage from tariff-induced disruptions.

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Corporate Central

Tesla (TSLA)

• Reported 336,000 vehicle deliveries for Q1 2025, the lowest quarterly figure since 2022
• Stock down -5.88% pre-market
• Why it matters: Tesla's delivery miss signals potential demand issues beyond just tariff concerns, raising questions about the company's growth trajectory in an increasingly competitive EV market.

RH (RH)

• Shares crashed -40% after significant earnings guidance miss
• Cited "continued softness in the luxury housing market" and "cautious high-end consumer"
• Why it matters: RH's dramatic decline offers a concerning signal about luxury consumer spending, potentially foreshadowing broader weakness in high-end retail.

Lamb Weston (LW)

• Surged +10% after beating earnings expectations
• Reported EPS of $1.67 vs. $1.38 expected
• Revenue of $1.65 billion vs. $1.63 billion expected
• Why it matters: Lamb Weston's strong performance amid market turmoil demonstrates the resilience of certain consumer staples businesses, particularly those with domestic supply chains.

Nike (NKE)

• Plunged -14.4% on Vietnam tariff exposure
• Company sources approximately 50% of its footwear from Vietnam
• Why it matters: Nike's selloff highlights the vulnerability of companies with complex global supply chains to sudden trade policy shifts, potentially forcing costly manufacturing relocations.

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Global Market View

International markets are reeling from the U.S. tariff announcement, with significant geopolitical and economic ripple effects emerging:

• China has vowed retaliation if the tariffs persist, raising concerns about an escalating trade war
• Mexico is planning a targeted response focused on auto sector tariffs
• Brent crude plummeted -4.6% to $70.05 per barrel despite OPEC+ output hike implementation
• Copper dropped -4.27% on global demand concerns
• The U.S. Dollar Index fell to 102.04, a six-month low, as markets price in more aggressive Fed easing
• The Japanese Yen strengthened +2.2% against the USD in a classic risk-off move

Asian markets showed significant stress, with Japan's Nikkei falling -1.85% and Australia's ASX 200 futures down -1.19%, suggesting continued pressure on global equities.

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Market Spotlight: Tariff Shock Triggers Recession Fears

President Trump's "Liberation Day" tariff announcement has sent shockwaves through global markets, erasing approximately $2 trillion in S&P 500 market value in a single session.

The scale and scope of the proposed tariffs – including a blanket 10% on all imports from China, 25% on Mexico and Canada, and up to 60% on specific Chinese goods – caught investors completely off guard.

Markets are now rapidly repricing three key risks: supply chain disruption, inflation resurgence, and potential recession. The bond market's dramatic rally suggests investors are most concerned about growth risks, with recession fears outweighing inflation worries.

Perhaps most telling is the Russell 2000's entry into bear market territory, down 21.5% from its November high. Small caps, with their greater domestic focus, would typically benefit from tariff protection.

Their severe underperformance signals that investors view the economic damage from trade disruption as outweighing any potential benefits to domestic producers.

The market reaction has been so severe that Fed Funds futures now price in 96 basis points of cuts by December – essentially doubling the expected pace of easing overnight.

This dramatic shift suggests markets believe the Fed may need to rapidly pivot from fighting inflation to combating recession risks.

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Analyst Actions

• Downgrade by Morgan Stanley to Equal Weight (from Overweight) for Nike (NKE) with Price Target $82 (from $109). Rationale: Significant Vietnam manufacturing exposure creates material tariff risk and potential margin compression.
• Upgrade by Goldman Sachs to Buy (from Neutral) for Lamb Weston (LW) with Price Target $103 (from $84). Rationale: Domestic supply chain insulates from tariff risks while strong earnings momentum continues.
• Downgrade by JPMorgan to Neutral (from Overweight) for Apple (AAPL) with Price Target $195 (from $235). Rationale: China tariff exposure creates significant supply chain and margin risks that could delay product launches.
• Upgrade by Bank of America to Buy (from Neutral) for Diageo (DEO) with Price Target $142 (from $125). Rationale: Alcohol products received more favorable tariff treatment than feared, creating relative advantage.

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Risk Radar

• Escalating Trade War: China and Mexico have both signaled retaliatory measures, which could trigger a dangerous cycle of escalating trade barriers and further economic damage.
• Supply Chain Disruption: Companies face difficult decisions about potentially relocating manufacturing operations, which could take years and billions in capital expenditure.
• Stagflation Risk: The combination of tariff-induced inflation and economic slowdown creates a challenging environment for the Federal Reserve, potentially limiting their ability to cut rates despite growth concerns.

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Look Ahead: What to Watch For

• March NFP Report (Today, 8:30 AM ET) – Consensus expects 135,000-140,000 jobs added, down from February's 275,000
• Fed Chair Powell Speech (Today, 11:25 AM ET) – Markets will scrutinize for any shift in tone regarding inflation vs. growth risks
• OPEC+ Output Hike Implementation – Monitoring compliance amid plunging oil prices
• Bank Earnings Next Week – Major financial institutions report, offering insight into economic conditions and loan demand
• Technical Support Levels – Watch for the Dow Jones at 40,000 (showing bullish RSI divergence) and S&P 500 resistance at 5,461 (Thursday's high)
• China Response – Any official retaliation announcement could trigger further market volatility

The market finds itself at a critical juncture, with today's jobs report and Powell's comments potentially determining whether yesterday's selloff was an overreaction or the beginning of a more sustained downturn.

Investors should prepare for continued volatility as markets digest the full implications of the tariff announcements and potential retaliatory measures.

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