S&P 500, Nasdaq, Dow Plunge as Donald Trump-Xi Trade War Escalates into Direct Clash

US stocks dropped sharply on Thursday, reversing some of their record-setting gains from the prior session as investors factored in the re-escalation of trade tensions between Washington and Beijing. The S&P 500 tumbled 2.9%, the Nasdaq Composite slid 3.5%, and the Dow Jones Industrial Average plunged nearly 1,000 points, or 2.2%, in a dramatic market reversal. Tech and energy shares led the declines as a renewed tariff offensive by President Trump against China cast a long shadow over market sentiment.

Trump’s Trade Shift
The pullback came just a day after Wall Street celebrated one of its biggest rallies since World War II, sparked by Trump's announcement of a 90-day tariff pause on most US trading partners. However, the optimism faded quickly as Trump doubled down on China, raising tariffs to an eye-popping 125%. Beijing retaliated with its own increase, hiking duties on US goods to 84%.

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Tech, Energy Stocks Bear the Brunt
The tech-heavy Nasdaq was hit hard, with Nvidia plunging over 5%, Tesla dropping 6%, and Apple falling 3.5%. Meta also sank more than 4% as the so-called 'Magnificent 7' tech stocks gave back a chunk of Wednesday’s explosive gains.
Energy stocks were also under pressure as oil prices slid — a reaction to fears that Chinese demand could weaken under prolonged tariff strain. China remains the world’s largest crude importer.

 

Inflation Cools
Meanwhile, fresh economic data offered a glimmer of hope. The Consumer Price Index rose 2.5% annually in March, below expectations, while prices slipped 0.1% month-over-month. Housing costs posted their slowest annual increase since late 2021, helping ease broader inflationary concerns. Yet even with inflation cooling, the broader uncertainty surrounding Trump’s trade policy weighed heavily on investors. Commerce Secretary Howard Lutnick attempted to spin a bullish narrative, declaring a coming economic “Golden Age,” but many on Wall Street remain skeptical.
 

As per many reports, experts are saying that Trump’s tariff pivot came after intense lobbying from Treasury Secretary Scott Bessent and other advisers, who warned of market chaos. Still, Trump’s unpredictable style leaves markets guessing. With the EU holding off its own tariffs for now and bond yields retreating to around 4.35%, investors are bracing for more volatility as the global economy navigates what JP Morgan called “merely the end of the beginning” in this high-stakes trade saga.