A staggering $2.5 trillion was wiped off the S&P 500 Index on Thursday as investors fretted over President Donald Trump's sweeping new tariffs, sparking recession fears. Companies heavily reliant on international manufacturing took the hardest hit.
Heaviest Losses
- Apple Inc.: Plummeted 9.3% due to its significant Chinese manufacturing presence.
Lululemon Athletica Inc. and Nike Inc.: Slumped over 9% each, tied to manufacturing connections with Vietnam.
Target Corp. and Dollar Tree Inc.: Dropped over 10%, burdened by imported products.
Market Impact
Over 80% of S&P 500 companies saw their stocks decline, with more than two-thirds shedding at least 2%. This widespread downturn marked the index's largest drop since June 2020 ¹.
Expert Insights
Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, noted, "There's really not anybody getting spared in absolute terms. You're just wrapped up in a broad de-risking."
Tariff Consequences
The levies' breadth and severity exceeded those imposed during Trump's first term, posing risks to global supply chains, economic slowdown, and inflation.
Inflation and Recession Concerns
Citigroup analysts warned that Apple's gross margin could shrink by 9% if it absorbs the increased costs from Chinese tariffs. JPMorgan economist Michael Feroli cautioned that the plan could push the economy near recession, adding 1.5% to prices this year.
Global Market Reaction
US assets suffered the most, with the S&P 500 falling 4.8%. In contrast, Asian stocks dropped less than 1%, and the Stoxx Europe 600 slid 2.6%.
Semiconductor and Industrial Sectors
- Philadelphia Semiconductor Index: Sank 9.9%, with Micron Technology Inc. down 16% and Broadcom Inc. 11%.
Caterpillar Inc. and Boeing Co.: Dropped at least 8%, impacted by Chinese sales.
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