Wall Street experienced a significant decline on Thursday, fueled by worries about the implications of elevated U.S. tariffs on the global economy. After a day of gains, stocks took a sharp downturn when President Donald Trump announced an escalation in tariffs, particularly affecting imports from China. This unsettling news overshadowed the previous day’s optimism, where the S&P 500 enjoyed its largest single-day percentage increase since 2008, and the Nasdaq celebrated its most substantial rise since 2001.

Tariff Tensions Escalate

On Thursday, President Trump intensified the trade dispute with China, raising tariffs on imports from the country to an astonishing 145%, as reported by CNBC. In retaliation, Beijing implemented tariffs of 84% on U.S. imports. Art Hogan, chief market strategist at B Riley Wealth, expressed concern over the ongoing trade war: “While yesterday’s rally appeared promising, it’s evident that the trade conflict with China continues to escalate.”

Economic Data and Market Reactions

In the backdrop of these tariff developments, the latest economic data revealed an unexpected dip in the Consumer Price Index (CPI), which fell by 0.1% in March, with an annual increase of 2.4%. This was contrary to economists’ predictions of a slight uptick of 0.1%. Fed Governor Michelle Bowman noted that the potential impact of the tariffs on the economy remains uncertain. As a result, traders are anticipating nearly 90 basis points of interest rate cuts by 2025, according to LSEG data.

Market Performance at Midday

By 12:19 p.m. ET, the Dow Jones Industrial Average plummeted by 1,872.86 points, or 4.61%, landing at 38,735.59. The S&P 500 dropped 298.72 points, or 5.45%, to 5,158.18, while the Nasdaq Composite saw a decrease of 1,091.78 points, or 6.38%, reaching 16,033.20. Market participants are keenly awaiting the auction of 30-year Treasury notes scheduled for 1:00 p.m. ET.

Sector Performance and Big Tech Trouble

Almost all sectors of the S&P 500 faced losses, with Information Technology and Energy leading the decline, both down over 7%. Major technology stocks were particularly hard hit, with Apple falling by 7%, Microsoft down 4.7%, and Nvidia dropping 8.5%. Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, mentioned, “A pullback today is entirely normal after such a significant movement yesterday. I anticipate some profit-taking over the next couple of days.”

Earnings Season and Market Outlook

Despite the rally on Wednesday, the S&P 500 and Dow remain more than 8% below the levels recorded before the reciprocal tariffs were announced last week. In particular, CarMax saw a dramatic 20.2% decline after failing to meet fourth-quarter profit expectations. The upcoming U.S. earnings season promises to provide further insights into the state of corporate America, with major banks like JPMorgan Chase set to release first-quarter results on Friday.

Declines Outnumber Advancements

The market breadth was decidedly negative, with declining stocks outpacing advancers at a 7.15-to-1 ratio on the NYSE and a 4.85-to-1 ratio on the Nasdaq. The S&P 500 recorded no new 52-week highs and three new lows, while the Nasdaq Composite noted nine new highs against 84 new lows.

This turbulent day on Wall Street underscores the ongoing volatility and uncertainty in the markets, driven largely by trade tensions and economic indicators. As traders look ahead, the focus will be on earnings reports and any developments in U.S.-China trade relations.