Dow Jones plunges more than 1,600 points as stock market recoils from Trump tariff shock

Nasdaq also sinks more than 1,000 points as investors fret over the potential economic impact of President Trump's latest tariffs.

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Updated on: April 3, 2025 / 5:49 PM EDT / CBS News

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Stocks cratered in the U.S. on Thursday as anxious investors tried to assess the potential economic impact of the latest round of Trump administration tariffs.

The Dow Jones Industrial Average plunged 1,679 points, or 4%, to close at 40,546. The S&P 500 sank 274 points, or 4.8%, its biggest one-day drop since Covid-19 torpedoed financial markets in 2020. That amounts to a loss of roughly $2 trillion, according to data from FactSet.

The tech-heavy Nasdaq also suffered its worst session since the pandemic, dropping more than 1,050 points, or nearly 6%. That nosedive reflects investor concerns about how steep tariffs on China, Taiwan, Vietnam and other manufacturing hubs could impact technology companies, analysts said. 

Shares of Apple, which has diversified its international supply chains in recent years but which still makes most of its iPhones in China, dropped nearly 10%. The new duties raise the nominal U.S. tariff rate on China to 54%.

"Investor psychology has been destroyed, and dip buyers are nowhere to be seen," equity analyst Adam Crisafulli, head of Vital Knowledge, said in a research note. "All the efforts to spin recent events positively are increasingly falling flat."

Highlighting the extent of the losses: Nearly every major industrial sector suffered declines, with tech players, banks, retailers, apparel makers and airlines among the hardest hit. Best Buy shares sank roughly 18%, United Airlines fell 16% and Nike slid 16%, while even AI powerhouse Nvidia saw its stock drop nearly 8%.

President Trump on Wednesday announced a 10% baseline tariff on all U.S. trading partners and increased levies on dozens of countries that charge higher taxes on American exports. Mr. Trump has said the goal is to make global commerce more fair, spur companies to expand in the U.S. and generate federal revenue. 

Experts warn that sharply ramping up tariffs on imports, coupled with any retaliatory measures from other nations, could drive up inflation, dampen spending by consumers and businesses, and hurt economic growth. 

"Market uncertainty is likely to remain elevated in the weeks ahead, as investors consider likely downgrades to consensus U.S. economic and earnings growth forecasts, the risk of a tit-for-tat escalation in tariffs and the potential scope for tariffs announced to be negotiated down," Solita Marcelli, Chief Investment Officer Americas at UBS Global Wealth Management, said in a note to investors.

Overseas markets also slumped Thursday. In Asia, Tokyo's Nikkei 225 index briefly dipped 4%, with automakers and banks taking big hits, before closing down 2.8%, while South Korea's benchmark Kospi fell 1.1%. Germany's DAX fell 3%, France's CAC 40 lost 3% and Britain's FTSE 100 shed 1.5%.

Appearing on CNN Thursday, White House Press Secretary Karoline Leavitt expressed confidence that the Trump administration's economic policies would pay off. Commenting on global financial markets sliding overnight, she said, "To anyone on Wall Street this morning, I would say trust in President Trump."

Financial markets surged after Mr. Trump was re-elected in November, with Wall Street counting on lower taxes and deregulation to fuel corporate profits. Other investors bet on the Trump administration threatening tariffs mostly as a way to pressure other countries into making concessions on trade, rather than a full-fledged push to change the terms of global commerce.

But after hitting all-time highs in February, stocks have turned tail as the White House makes clear it wasn't bluffing. Indeed, investors have been left stunned by the speed and scale of Mr. Trump's tariffs. 

In contrast to his first term, when he implemented levies on roughly $380 billion worth of goods over four years, Mr. Trump has imposed more than $3 trillion in tariffs in the less than three months since his return to power, according to the Economic Policy institute, a left-leaning think tank. 

"Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade," said Sean Sun, portfolio manager at Thornburg Investment management.

Including its Thursday dive, the S&P 500 is now down 8.2% this year, the Dow has sunk 4.7% and the Nasdaq has tumbled 14.3%.

Despite the angst on Wall Street, economists note that the U.S. continues to grow, and most still put relatively low odds on a recession. Hiring around the U.S. also remains healthy, with the nation's unemployment rate hovering around 4%. 

For borrowers, meanwhile, further signs the economy is at risk of stalling could encourage the Federal Reserve to lower its benchmark interest rate. The central bank last cut rates in December of 2024, but has kept them steady since then as policy makers seek to douse inflation.

The Associated Press contributed to this report.

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In: Dow Jones S&P 500 Nasdaq Tariffs Stock Market Donald Trump Alain Sherter

Alain Sherter is a senior managing editor with CBS News. He covers business, economics, money and workplace issues for CBS MoneyWatch.

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