Stocks took another big hit on Friday after China announced new tariffs on U.S. goods in response to the tariffs imposed by President Trump earlier this week. This raised concerns that a trade war could push the global economy into a recession.
The Dow Jones Industrial Average dropped 1,400 points, or 3.3%. Futures suggested the Dow would open 1,500 points lower when trading officially began. This follows a 1,679-point loss on Thursday. The S&P 500 futures fell 3.5% after losing 4.84% the day before. The Nasdaq 100 futures dropped 4%, as many tech companies are closely tied to China.
On Friday, China’s commerce ministry said it would impose a 34% tariff on all U.S. goods, matching the tariff Trump announced for Chinese imports into the U.S. on Wednesday.
“The Trump administration may be playing a game of chicken with trading partners, but market participants aren’t willing to wait around for the results,” said Michael Arone, chief investment strategist at State Street Global Advisors. “Investors are selling first and asking questions later.”
Companies with big business in China saw the biggest losses in early trading. Apple and Qualcomm were both down by 5% and 6%, respectively. Tesla lost 5%, and Caterpillar dropped 6%. Nvidia was down about 4%.
Bank stocks also fell as fears of a U.S. economic slowdown grew. Morgan Stanley dropped 5%, Goldman Sachs lost 4.5%, and Citigroup and JPMorgan Chase each fell more than 4%. Wells Fargo dipped 5%.
The 10-year Treasury yield fell below 4% as investors rushed to buy bonds for safety, which pushed bond prices up and interest rates down. JPMorgan raised its estimate for a recession this year, now predicting a 60% chance, up from 40%.
This market drop follows a rough day on Thursday when Trump’s tariffs sent stocks into their worst day since 2020. The S&P 500 entered a correction on Thursday, down about 12% from its February peak. The small-cap Russell 2000 index dropped more than 6%, marking the first time it has fallen 20% from its last high, officially entering a bear market.
The Nasdaq has been hit hardest this week, falling 4.5% as investors reacted to the tariff news. The S&P 500 and Dow have both lost 3.3% and 2.5% this week. Both the Nasdaq and the S&P 500 are on track for their worst weekly performance since September 2024, marking the sixth negative week in the past seven.
Investors are also focused on the March jobs report coming out Friday morning. Economists expect nonfarm payrolls to increase by 140,000 jobs, with the unemployment rate holding steady at 4.1%.
