Global Stock Market Crash: Intensifying Sino-American Trade War Leads to Largest Decline in U.S. Stocks in Years
Technology Stocks Lead the Decline, Fear Index Surges Past 40, Wall Street Worries About Bear Market and Recession Storm
The US stock market faced significant declines for the second consecutive day, following China’s announcement of new tariffs on American goods, igniting concerns over an escalation of the global trade war. As investors worried that the Trump administration’s hardline stance would lead the global economy into recession, all three major stock indices plummeted, marking the most severe decline since the outbreak of the COVID-19 pandemic.
Dow Jones Plummets Over 2,200 Points, US Stocks See Record Drops for Two Consecutive Days
On Friday, the Dow Jones Industrial Average fell by 2,231.07 points, a drop of 5.5%, closing at 38,314.86 points, marking the largest single-day decline since the peak of the pandemic in June 2020. This marks the second consecutive day of severe drops for the Dow, which had already fallen by 1,679 points on Thursday, setting a historical record for the first time that the index dropped over 1,500 points for two consecutive days.
The S&P 500 also experienced a significant drop of 5.97%, closing at 5,074.08 points, the worst single-day performance since March 2020. Over the past two days, the index has fallen more than 10%, down over 17% from recent highs, entering a technical correction zone.
The Nasdaq Composite Index also suffered a brutal decline, dropping 5.8% on Friday to 15,587.79 points. This marks a nearly 12% drop over two consecutive days, and it has fallen over 22% from its high in December last year, officially entering bear market territory.
China Imposes 34% Retaliatory Tariffs, US-China Tensions Escalate
The primary cause of the market turbulence was the Chinese Ministry of Commerce’s announcement on Friday to impose retaliatory tariffs of up to 34% on all US goods, directly responding to the tariffs announced by the Trump administration earlier. Initially, the market hoped that there was still room for negotiation, but China’s actions clearly indicated a “hard confrontation,” leading to a collapse in investor confidence.
Tech Giants Suffer Heavy Losses, Apple and NVIDIA Both Drop Over 10% This Week
The market sell-off on Friday was led by technology stocks. Apple’s stock plummeted 7% in a single day, with a cumulative decline of 13% for the week. AI leader NVIDIA also saw a significant drop of 7%, while Tesla fell by 10%. All three companies have substantial business in the Chinese market, making them direct victims of Beijing’s retaliatory tariffs.
Other companies highly dependent on exports to China also faced hardships. Boeing fell by 9%, while heavy machinery manufacturer Caterpillar dropped nearly 6%, becoming the two main culprits dragging down the Dow.
Beijing Escalates Retaliation, Initiates Antitrust Investigations Against US Firms
China’s retaliatory actions did not stop at tariffs. On the same day, the Beijing authorities placed several American companies on a “unreliable entities list,” citing violations of market rules or failure to fulfill contracts. Additionally, China initiated an antitrust investigation against American chemical giant DuPont, causing its stock to plummet nearly 13% upon hearing the news.
These actions further undermined market confidence, raising investor concerns that the US-China conflict has entered a phase of comprehensive economic confrontation.
Panic Spreads, Funds Flow into Bond Market for Safe Haven
As market panic intensified, investors began to shift heavily into safe-haven assets such as government bonds. The yield on the 10-year US Treasury fell below 4% on Friday, indicating a rapid influx of capital into the bond market. Simultaneously, the CBOE Volatility Index (VIX), which measures market fear, surged to over 40, a level typically seen only during severe stock market crashes.
Trump Sticks to Tariff Position, Market Fears Further Escalation Over the Weekend
Despite the market’s severe declines over two days, former President Trump maintained a hardline stance. He posted on Truth Social on Friday: “My policies never change.” Market experts worry that with the weekend approaching, the trade war may continue to escalate, and the US side shows no signs of backing down.
“The market’s biggest fear is that this trade war will continue to deteriorate, and the US has no room for maneuver,” said Jay Woods, Global Strategist at Freedom Capital Markets.
US Stocks Experience Disastrous Week, Worst Weekly Performance Since Pandemic
After a week of extreme volatility, the S&P 500 fell as much as 9% for the week, marking the worst weekly performance since the onset of the COVID-19 pandemic in 2020. Investors are concerned that if the trade war continues to escalate, the global economy could fall into a prolonged recession, and the stock market bear market may just be beginning.
As Emily Bowersock Hill, CEO of Bowersock Capital Partners, stated: “This bull market is over, destroyed by ideology and self-destructive policies. Even if we may see a bottom in the short term, the long-term damage of the global trade war to the economy will be profound.”
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