'History being made... Liberation day...': Expert on market rout after S&P 500 sees its biggest loss since 2020

Wall Street experienced its most significant one-day setback since the early stages of the Covid pandemic, with a sharp sell-off gripping the market on Thursday. Market concerns over a potential trade war and the possibility of the US entering a recession intensified following President Trump's announcement of tariffs. The S&P 500 saw its largest one-day decline since 2020, dropping 4.84%.

Global investors were shocked by Trump's unveiling of the most stringent trade barriers in more than a century late on Wednesday. This move caused stock markets and the dollar to plummet, leading investors to seek refuge in assets like bonds and the Japanese yen.

Global investors grappled with the increasing likelihood of an economic downturn and a widespread trade war as they sought safe-haven assets to protect against the repercussions of President Trump's extensive tariffs.

The S&P 500 experienced a decrease of 275.05 points, equivalent to a 4.85% decline. The Nasdaq Composite fell by 1,053.60 points, representing a decrease of 5.99%. The Dow Jones Industrial Average also saw a decline of 1,682.61 points, which amounts to a 3.98% decrease.

During one trading session, a staggering $2.4 trillion in US stock market value disappeared, causing global markets to plummet. Tech, banks, energy, and retail sectors were hit the hardest. Analysts issued warnings of a possible recession, inflation, and prolonged uncertainty.

Additionally, the US dollar saw its most significant one-day decline ever, decreasing by 2.1% against other major currencies. Investors are worried about the repercussions of President Trump's wide-ranging trade tariffs on the US economy, prompting a downturn in confidence in the dollar.

Alok Jain, the Founder of Weekend Investing, recently commented on the impact of reciprocal tariffs on US stock investors, stating that they are now enjoying greater profit margins.

"History being made... Liberation day..  Investors of US stocks have been liberated of their profits," Jain wrote on X.

After shock

Trump's tariff announcement on Wednesday sent ripples through markets in Asia and Europe, prompting foreign leaders to express a willingness to engage in negotiations while also hinting at the possibility of retaliatory tariffs. Trump's decision to impose 10% import duties on all nations, along with higher levies on imports from specific countries like China and the European Union, caused further upheaval. Additionally, separate tariffs of 25% on all foreign-made cars were implemented, leading Canada to swiftly respond with a similar levy on US imports.

Major international institutions, such as the World Trade Organisation (WTO) and the International Monetary Fund (IMF), have expressed alarm over the recent surge in reciprocal tariffs by the United States. These tariffs are anticipated to disrupt the existing global trade framework and may spark a prolonged trade dispute between key trading entities like China and the European Union, potentially impacting worldwide merchandise trade levels.

Preliminary evaluations conducted by the WTO suggest that the US tariff measures implemented on April 2, alongside those put in place earlier this year, could lead to a decline of approximately 1% in global merchandise trade volumes for the year. This forecast represents a significant downward revision from previous estimations, according to WTO Director-General Ngozi Okonjo-Iweala.

Likewise, the IMF has warned that the recent US tariffs have raised concerns about a slowdown in global economic growth, underscoring the necessity for the US to ease trade tensions.

“We are still assessing the macroeconomic implications of the announced tariff measures, but they clearly represent a significant risk to the global outlook at a time of sluggish growth. It is important to avoid steps that could further harm the world economy. We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty,” IMF Managing Director Kristalina Georgieva said.