U.S. markets took a nosedive on Thursday with the Nasdaq plummeting by more than 3% in early trading, underscoring the volatility sparked by recent trade policy developments. This followed a momentary reprieve after President Donald Trump announced a temporary easing of steep tariffs on numerous nations, which had initially buoyed investor sentiment.
Despite positive news on the economic front, where consumer prices recorded a drop in March, market enthusiasm was insufficient to sustain the previous session’s rally. The S&P 500 fell by over 2.8% while the Nasdaq Composite registered a 3.5% decrease. Simultaneously, the Dow Jones Industrial Average dropped nearly 1,000 points, marking more than a 2% decline.
On Wednesday, investors had welcomed Trump’s decision to halt major U.S. tariff hikes on key trading partners, resulting in one of the most significant market rallies since the conclusion of World War II. However, this optimism was quickly dampened as traders confronted the renewed fervor in the U.S.-China trade war. Trump’s recent decision to elevate tariffs on Chinese imports to an astronomical 145% comes in retaliation to China’s earlier move to raise tariffs on U.S. goods to 125%.
Adding to the complex economic narrative, the Bureau of Labor Statistics disclosed that the consumer price index had experienced a slight decline of 0.1% in March, bringing the annual inflation rate to 2.4%, a reduction from February’s 2.8%. Core inflation, which excludes the volatile food and energy sectors, held steady with a modest 0.1% monthly rise, marking its lowest annual rate since March 2021. Investors now brace for the economic impact as these trade tensions continue to stir global markets.
