Market Meltdown: U.S. Stocks Plummet Amid Tariff Turmoil and Global Uncertainty

U.S. stocks experienced a significant downturn for the third consecutive day on Monday, following President Donald Trump’s announcement of unexpectedly high tariff rates on major trading partners. The market reacted dramatically, reflecting widespread investor anxiety over the potential for an economic fallout.

Initially, stocks staged a brief rally at market open, lifting the Dow Jones Industrial Average into positive territory. Speculation about a potential 90-day tariff pause circulated among traders and social media, contributing to the temporary surge. However, the White House quickly dismissed these rumors as “fake news,” leading to renewed declines throughout the session.

By the close, the S&P 500 had dropped by 2.2%, nearing a bear market with a decline of 19% from its February record. The Dow Jones tumbled 940 points, or 2.5%, marking the first time in history it had recorded back-to-back losses exceeding 1,500 points. Meanwhile, the Nasdaq Composite fell deeper into bear market territory with a 2% drop.

The catalyst for the sell-off was Trump’s unilateral 10% tariff, which took effect over the weekend. Investors had hoped for positive developments regarding negotiations to lower these tariffs or at least a delay on reciprocal tariffs set to begin on April 9. Instead, the president and his advisors downplayed the market’s reaction.

“I don’t want anything to go down, but sometimes you have to take medicine to fix something,” Trump stated, emphasizing the need to address the significant trade deficit with China. Commerce Secretary Howard Lutnick confirmed that the tariffs would not be postponed, stating, “The tariffs are coming. They are definitely going to stay in place for days and weeks.”

Treasury Secretary Scott Bessent acknowledged that over 50 countries had approached the administration for negotiations, but warned that longstanding issues couldn’t be resolved quickly. Investors were taken aback by the severity of the tariffs, which seemed to lack a coherent economic rationale. The situation escalated when China responded with a 34% tariff on all U.S. imports, further heightening tensions.

Billionaire investor Bill Ackman expressed his concerns on social media, stating that the president was losing the confidence of global business leaders. He urged Trump to consider a timeout to reassess the tariff strategy, warning of a potential “self-induced economic nuclear winter.”

As the administration claimed that numerous nations were seeking negotiations, Canada and the European Union prepared to mirror China’s retaliatory actions. While Vietnam indicated a willingness to eliminate tariffs on U.S. imports, trade advisor Peter Navarro dismissed this as insufficient, highlighting ongoing non-tariff issues.

Fears of a self-perpetuating market sell-off grew, with hedge funds potentially forced to liquidate equities to meet margin calls. The CBOE Volatility Index, a measure of market fear, surged to an extreme level of 50, typically associated with bear markets.

“Margin calls are going out as we speak,” noted Chris Rupkey, chief economist at FWDBONDS. “For a third straight day, investors in U.S. equity markets have expressed serious doubts about the White House’s tariff policies, which have sent shockwaves through Wall Street.”

The repercussions of the market decline extended beyond equities, impacting other assets globally. Bitcoin prices fell below $77,000, U.S. crude oil dropped to below $60 a barrel—its lowest in years—and Hong Kong’s Hang Seng Index recorded a 13% decline, the largest since 1997. Germany’s DAX Index also suffered, losing as much as 10% during the trading session.