US stock market plummets amid tariff concerns and global recession fears

NEW YORK: The United States (US) market experienced a huge downturn on Thursday, with major indexes registering their largest daily percentage drops since 2020.

The S&P 500 and Dow Jones Industrial Average recorded their most substantial declines since June 2020, while the Nasdaq Composite Index fell by 5.97 per cent, marking its biggest drop since March 2020.

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The turmoil was largely attributed to the announcement of drastic trade tariffs by US President, Donald Trump, which raised fears of a potential global recession.

The S&P 500 companies collectively lost over a whopping $2.4 trillion in market value. The technology sector was the worst hit, with the S&P 500 tech index declining by 6.9 per cent.

Major tech companies saw significant losses, with Apple shares falling by 9.2 per cent, Amazon by 9 per cent, Microsoft by 2.4 per cent and Nvidia by 7.8 per cent.

The energy sector also faced issues as it dropped by 7.5 per cent.

The International Monetary Fund (IMF) reacted to the US tariff implementations, indicating that the tariffs posed a threat to the pace of global economic growth. The Managing Director of the IMF, Kristalina Georgieva, talked about avoiding measures that could further damage the global economy.

She urged the US to work constructively to reduce trade tensions and uncertainty.

Fitch Rating also weighed on the situation, warning that the new US tariffs threatened to push the economy towards recession.

The agency noted that the tariffs have reached levels not seen since 1909 and projected that the US growth rate would remain below 1.7 per cent.

Fitch also indicated that the tariffs would contribute to rising inflation and lower corporate profits, which could weaken investment due to increased policy uncertainty.

In the midst of the market upheaval, Trump stated that he was ready to negotiate on tariffs if any country presented a ‘favourable’ offer. He also mentioned that he would consider withdrawing some measures against China if an agreement regarding TikTok’s ownership in the US could be reached.

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Meanwhile, an irked Canada announced plans to impose a 25 per cent tax on imported vehicles from the US, with the Canadian PM Mark Carney stating that the measures would be designed to have a greater impact on the US economy.

He also announced plans to improve trade ties with other ‘trusted partners’.