Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 4.Brendan McDermid/Reuters
Stocks across the world tumbled further on Friday, sending the Nasdaq into a bear market and the TSX into a correction, as the escalating global trade war had investors bracing for a major hit to economic growth and corporate profits in the days to come.
U.S. stocks have shed US$6.4 trillion in market value over the past two sessions, the most on record, according to Dow Jones Market Data. The largest two-day pullback had been US$4.4 trillion, set in March 2020.
Friday also marked the most number of shares traded in one day in American stock market history, with volume on U.S. exchanges of about 26.79 billion shares.
The TSX ended down more than 1,100 points, exceeding even the prior session’s hefty losses, as oil prices plunged nearly 8% to the lowest level since 2021.
The Canadian benchmark, as well as all three major U.S. stock indexes, posted their largest two-day declines since the emerging coronavirus caused global panic during U.S. President Donald Trump’s first term. The S&P/TSX Composite Index has lost 8.4%, the Dow Jones Industrial Average 9.3%, the S&P 500 10.5% and the Nasdaq 11.4%.
Since late on Wednesday, when Trump boosted tariff barriers to their highest level in more than a century, investors have dumped stocks, fearing both the new U.S. economic reality and also how U.S. trading partners might retaliate by steepening their own trade barriers.
Global governments began reacting to Trump’s tariff announcement on Friday, further undermining investor sentiment that a global recession could be averted. JP Morgan said it was forecasting a 60% chance of the global economy entering a recession by year-end, up from 40% previously.
China’s finance ministry said it would impose additional tariffs of 34% on all U.S. goods from April 10. Meanwhile, the prime ministers of Britain, Australia and Italy held talks on how to respond to Trump’s tariff salvo.
While financial market reaction to Trump’s tariffs was swift and punishing Thursday, there was still a relative calm to the move, contained by hopes that weaker markets may well force a backing down on tariffs by the Trump Administration, said Douglas Porter, chief economist at BMO Capital Markets.
“Unfortunately, most of the messaging since has doubled down on the hard-line trade stance,” said Porter.
Panic is now starting to seep in. The CBOE Volatility Index, or Wall Street’s fear gauge, closed at its highest level Friday since April 2020.
“For markets and economists and central banks, the key question is how long does this tariff regime persist, and does it actually get even worse? We had been assuming that serious tariffs may persist for a year, but that was on the assumption that the global tariffs would not be as meaty as what was revealed on Wednesday,” Porter said in a note.
Federal Reserve Chair Jerome Powell on Friday spoke publicly for the first time since Trump’s tariff announcement and didn’t offer much encouragement for investors. Powell highlighted the unexpectedly hefty tariffs could trigger higher inflation and slower growth, setting the stage for challenging decisions for U.S. central bankers.
In an interview with conservative host Tucker Carlson released on Friday, U.S. Treasury Secretary Scott Bessent asserted that the plunge in U.S. stocks was driven more by the surprise emergence of China’s DeepSeek artificial intelligence tool than by Trump’s policies.
As for Trump himself, he seemed unfazed. From Mar-a-Lago, his private club in Florida, he headed to his golf course a few miles away after writing on social media that “THIS IS A GREAT TIME TO GET RICH.”
The Nasdaq slid on Friday 962.82 points, or 5.82%, to 15,587.79, confirming the tech-heavy index was in a bear market - a move of 20% or greater from recent highs.
Meanwhile, the Dow Jones Industrial Average fell 2,231.07 points, or 5.50%, to 38,314.86 points, confirming a correction to its record closing high of 45,014.04 on December 4. A correction is a move down of at least 10% from recent highs.
The S&P 500 lost 322.44 points, or 5.97%, to close at 5,074.08 points, its lowest finish in 11 months.
For the week, the S&P 500 fell 9.1%, the Dow declined 7.9%, and the Nasdaq slumped 10%.
The S&P/TSX composite index on Friday fell 1,142.30 points, or 4.7%, to 23,193.47, its lowest closing level since September 10. It’s down 6.3% for the week.
All ten major TSX sectors ended lower, led by an 8.7% drop for energy stocks. Gold and copper prices also tumbled. The materials group, which includes metal mining shares, lost 8%. Heavily weighted financials fell 4.1% and technology ended 3.7% lower.
Safe-haven buying in the bond market sent the yield on benchmark US 10-year Treasury note to below 4%. Bond yields in Canada held relatively steady, even as the country’s labour report for March came in much weaker than expected. The data raised market bets to about 60% that the Bank of Canada will cut interest rates again at its next policy meeting later this month.
The rise in U.S. Treasury yields pushed American bank stocks down further, with the sector under pressure globally, as the prospect of interest rate cuts from central banks and a hit to economic growth from tariffs would crimp profitability. The S&P Banks index dropped 7.3%.
All 11 S&P 500 sectors dropped by more than 4.5%, with energy the leading laggard for the second straight day, off 8.7%, as companies tracked a 7.3% decline in U.S. crude prices.
U.S.-listed shares of Chinese companies dived, with JD.com and Alibaba and Baidu all down more than 7.7%. Companies with exposure to China also fell across the board, with mega-caps such as Apple dropping 7.3%.
The chipmakers index sank 7.6%, having declined 9.9% the previous day. The sector is particularly vulnerable to a double tariff whammy as many chip companies design their chips in the U.S., but have them manufactured in China.
With reports from Reuters and The Associated Press
With reports from Reuters and The Associated Press