United States benchmark averages suffered steep losses on Thursday (Friday AEST), erasing much of the previous day’s historic rally after President Donald Trump announced a 90-day reprieve on certain “reciprocal” tariffs.
While the pause had initially lifted market sentiment, investor concerns quickly resurfaced, particularly over the potential economic drag from heightened tariffs on Chinese imports.
During Thursday's regular session, the Dow Jones Industrial Average plunged 1,014.8 points, or 2.5%, closing at 39,593.7. The S&P 500 fell 3.5% to 5,268.1, and the tech-heavy Nasdaq Composite tumbled 4.3% to finish at 16,387.3.
Major technology names led the decline. Apple shares dropped 4.2%, Tesla sank 7.3%, Nvidia retreated 5.9%, and Meta Platforms slumped 6.7%.
The broad selloff deepened following confirmation from the White House that the effective tariff rate on Chinese goods would total 145%, comprised of a new 125% duty in addition to an existing 20% levy related to the fentanyl crisis.
Despite the market reaction, Trump suggested that the temporary tariff pause could be extended. “We’ll have to see what happens at that time,” Trump said at a Cabinet meeting.
Thursday’s decline offset part of Wednesday’s extraordinary rally, in which the S&P 500 surged over 9%, the largest percentage gain for the index since 2008. The Dow posted its strongest increase since March 2020, while the Nasdaq recorded its biggest one-day advance since January 2001 and its second-best on record.
The previous day’s rally had been triggered by Trump’s announcement of a 90-day reduction in tariff rates to 10% for most countries. Canada and Mexico were exempted from the additional duty, and the European Union reciprocated with its own 90-day pause on levies targeting U.S. goods.
However, market participants remain cautious. Despite the temporary relief, there is widespread concern that the broader economic implications of a protracted trade conflict with China could weigh on growth.
On the bond markets, 10-year US Treasury yields climbed 2.2% to a near six-week high of 4.87%, while 2-year yields fell 1.3% to 3.862%.
