Stocks across the globe were lower Friday after President Donald Trump unveiled his plan for levying tariffs on trading partners, threatening to upend decades of international cooperation.
The Dow tumbled 665 points, or 1.5%. The broader S&P 500 fell 1.87% and the tech-heavy Nasdaq Composite slipped 2.5%.
The S&P 500 and Nasdaq were on track for their biggest single-day losses since April. The Dow was on track for its biggest drop in over one month. The blue-chip index fell every day this week as Trump’s tariffs have come back into focus.
Trump late Thursday released his long-awaited plan for tariffs on US trading partners. The president laid out tariffs ranging from 10% to 41% on countries from Chile to Syria, set to take effect August 7 — which was later than expected.
Investors in recent months have begun to try and look past Trump’s tariffs, betting the president will back down on his most daunting threats. As the president has tempered his approach — including once again delaying the start of tariffs — markets have tried to adjust to the prospect of a more protectionist global order. But the scope and unprecedented nature of the tariff campaign portends to roil the global economy and markets.
“Our base case remains that the US effective tariff rate should settle at around 15% by the end of the year, and the economic impact is likely to prove manageable,” Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management, said in a note.
“Still, tariffs are a headwind for global trade and growth, and they have started to contribute to a rise in inflation,” Hoffmann-Burchardi said. “With markets already pricing in much of the good news on the trade front, we expect stock volatility to pick up in the near term.”
Stocks took a step lower and Treasury bonds rallied Friday morning after the latest jobs data showed the US economy added 73,000 jobs in July, which was less than expected.
The 10-year and 30-year Treasury yields fell to 4.23% to and 4.81%, respectively, as investors snapped up bonds in a flight to safety and to lock in high rates.
Meanwhile, the US dollar dropped. The dollar index, which measures the dollar’s strength against six major foreign currencies, fell 0.85%. Gold, a safe haven during uncertainty, rallied 1.5%.
“The stock market will probably move past this particular report and keep climbing this month, but today could be an ugly day in the market given the confluence of new tariff announcements and more evidence that the job market is slowing,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in an email.
European stocks posts worst day since April
US stocks on Friday followed stocks in Europe and Asia lower.
Europe’s benchmark Stoxx 600 index sank 1.89%, while Germany’s DAX index and France’s CAC 40 index dropped 2.66% and 2.91%, respectively.
Each of the indexes posted their biggest single-day loss since early April.
In Asia, markets were modestly lower. Hong Kong’s Hang Seng index dropped 1.07%, Japan’s Nikkei 225 fell 0.66% and Taiwan’s benchmark index sank 0.46%.
“Today is merely the next episode in Trump’s tariff story – it’s unwelcome, hence the market dip; but it’s not entirely unexpected, hence the lack of a full market crash,” Russ Mould, investment director at AJ Bell, said in a note.
Global markets turned lower as Trump announced his tariff plans, although losses so far were relatively contained compared to the intense turmoil of early April when there was an unusual and simultaneous sell-off in US stocks, bonds and the dollar.
“While the dollar sell-off in April included a degree of shock and surprise that wont be replicated now, we would still conclude tariffs as ultimately dollar negative over time as it hits real growth, lowers real yields and will encourage portfolio diversification,” Derek Halpenny, head of research for global markets at MUFG, said in a note.
Stock market rally faces major tariff test
Investors have been gearing up for Trump’s long-awaited tariff plan. Stocks had been on a steady climb higher in recent months, but the momentum began to stall in July. The S&P 500 rose just over 2% in July after climbing 6% in May and 5% in June.
Many investors have embraced the “TACO” trade, betting that “Trump always chickens out” on his biggest tariff threats. That trade has also faced hiccups, though, as the president has pressed forward with high levies on goods like steel and aluminum.
“Tariff worries are back in focus, and even though the market has remained resilient, we are still in a headline-sensitive market,” Glen Smith, chief investment officer at GDS Wealth Management, said in an email.
While investors are concerned about the prospect of tariffs, they might also want to wait and see evidence of the impact on inflation or the labor market in the economic data, Zachary Hill, head of portfolio management at Horizon Investments, said.
And while Wall Street is fixated on tariffs, corporate earnings were also impacting the market. Shares in Amazon (AMZN) fell 8.6% on Friday after its forecast did not impress investors.
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