Major United States benchmark averages endured their worst two-day slump since the Covid-19 pandemic as escalating trade tensions between the United States and China rattled investors.
Markets tumbled on Friday (Saturday AEDT) after China responded to fresh U.S. tariffs with a sweeping 34% levy on American goods, intensifying fears of a global economic downturn.
During Friday's trade, the Dow Jones Industrial Average plummeted 2,231.1 points, or 5.5%, to close at 38,314.9, following a 1,679-point drop on Thursday. It marked the first time the blue-chip index has lost over 1,500 points on consecutive days.
The S&P 500 plunged 6% to 5,074.1, its steepest decline since March 2020, and has now fallen more than 17% from its recent peak.
The Nasdaq Composite, heavily weighted with tech firms that rely on Chinese markets, fell 5.8% to 15,587.8. The tech index is now down 22% from its December high, entering bear market territory.
Technology stocks bore the brunt of the losses. Apple shares tumbled 7.3% on Friday, Nvidia also slid 7.4%, and Tesla shares plunged 10.4%.
Outside the tech sector, industrial heavyweights such as Boeing and Caterpillar - both major exporters to China - fell 9.5% and 5.8%, respectively.
For the week, the Dow lost 7.9%, the S&P 500 fell 9%, and the Nasdaq shed 10%.
The shockwaves extended into cryptocurrency markets, with Bitcoin dropping below US$79,000 as investors sought safer havens amid mounting uncertainty.
China’s retaliation went beyond tariffs. Beijing also added several U.S. companies to its “unreliable entities list”, accusing them of violating market rules and contractual obligations, a move likely to deepen the rift between the two economic giants.
The CBOE Volatility Index (VIX), known as Wall Street’s “fear gauge”, spiked 50.9% to 45.3 - an extreme level historically associated with sharp market downturns.
Despite the financial turmoil, President Donald Trump stood firm on his aggressive trade stance.
Posting on Truth Social, he declared, “THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic.”
On the bond market, investors fled to safety, driving yields sharply lower. The 10-year Treasury yield fell to 4%, while the 2-year yield dropped to 3.644%.
