Traders work on the floor of the New York Stock Exchange (NYSE) at the opening bell on April 10, 2025, in New York City.CHARLY TRIBALLEAU/AFP/Getty Images
U.S. and Canadian stocks tumbled Thursday and surrendered a large portion of their historic gains from the day before, as escalating tensions between Washington and Beijing dampened optimism over the global trade war and its economic impact.
The S&P 500 dove 3.5%, slicing into Wednesday’s surge of 9.5% following U.S. President Donald Trump’s decision to pause many of his tariffs worldwide. The Dow Jones Industrial Average dropped 2.5% and the Nasdaq composite tumbled 4.3%.
The Canadian benchmark index followed in Wall Street’s footsteps, losing 3%. It rallied 5.4% on Wednesday.
“This is bonkers. I think a lot of retail clients, talking to their advisers after this latest downturn, are saying, just get me out of the way of this landslide and we can come back later,” said Jim Carroll, senior wealth advisor and portfolio manager, at Ballast Rock Private Wealth of Charleston, South Carolina.
“What they’re feeling is an unusual degree of anxiety,” he added. “We’re backing China up against a wall. What’s going to happen next? It frightens people.”
Market declines accelerated during Thursday’s session after the White House said U.S. tariffs on China would total 145%, higher than the 125% it previous indicated. Meanwhile, China has ramped up its own countermeasures to Trump’s tariffs, and has reached out to other countries around the world in apparent hopes of forming a united front against the U.S. president.
In a more positive development Thursday, the European Union said it will put its trade retaliation measures on hold for 90 days and leave room for a negotiated solution.
Following the whipsaw of Wednesday’s bounce and Thursday’s selloff, the S&P 500 remained 7.1% below where it was just before the reciprocal tariffs were announced last week.
“Investors are still uncomfortable ... because they don’t know what the end game is,” said Paul Nolte, senior wealth advisor at Murphy & Sylvest in Elmhurst, Illinois. “I think what we’re seeing, still, is investor concern about tariffs and that is pretty much front and center for everything.”
The Canadian dollar rose to a near five-month high against the greenback, as investors reduced their exposure to U.S. financial markets, anticipating that the global trade war could upend a period of outperformance for the American economy.
The loonie was trading 0.6% higher at 1.3995 per U.S. dollar by late day, or 71.45 U.S. cents, after touching its strongest intraday level since November 25 at 1.3952.
“We’re seeing a bit of repatriation out of U.S. assets,” said Noah Buffam, an FX strategist at CIBC Capital Markets. “The market is reassessing how exceptional the U.S. is over a longer-term period.”
In economic data Thursday, the Labor Department’s Consumer Price Index report showed the prices U.S. consumers pay for a basket of goods unexpectedly edged lower in March, with core price growth cooling down to 2.8% year-on-year, coming within one percentage point of the Federal Reserve’s 2% inflation target.
Still, the Fed’s path forward is especially murky right now because of the ongoing trade negotiations.
Fed Governor Michelle Bowman said on Thursday that while the U.S. economy remains strong, the effects of Trump’s trade policies are unclear, while Chicago Fed President Austan Goolsbee said rate cuts could resume once the uncertainties surrounding trade policy is resolved.
The CBOE Market Volatility Index, often called the “fear index,” remained elevated, but closed off the session high of 40.86.
Thursday’s swings also made for further volatility in the bond market.
The 10-year Treasury yield had calmed following Trump’s U-turn on tariffs, dropping back to 4.30% shortly after the release of the better-than-expected inflation report. That’s after it had shot up to nearly 4.50% Wednesday morning from just 4.01% at the end of last week.
As Thursday progressed, though, the 10-year Treasury yield climbed once again and reached 4.40%. Canadian bond yields also edged higher Thursday.
The Dow Jones Industrial Average fell 1,014.79 points, or 2.50%, to 39,593.66. The S&P 500 lost 188.85 points, or 3.46%, at 5,268.05 and the Nasdaq Composite dropped 737.66 points, or 4.31%, to 16,387.31.
In Toronto, energy and highflying technology stocks were among the biggest decliners.
The S&P/TSX composite index ended down 712.16 points, or 3%, at 23,014.87.
The Toronto market’s technology sector fell 6.1%, with e-commerce company Shopify Inc down 8.4% and Constellation Software Inc ending 6.4% lower.
The TSX energy sector tumbled 6.6% as the price of oil settled 3.7% lower at US$60.07 a barrel, while heavily weighted financials lost 3.7%.
The consumer staples sector posted a more modest decline of 0.5%. It was helped by a gain of nearly 1% for the shares of grocery retailer Loblaw Companies Ltd.
Grocery stores could benefit from the inflation that tariffs tend to generate so long as they can sustain the same percentage profit margin on their goods.
The materials group was the only one of 10 major TSX sectors to end higher.
It was up 1.3% as copper prices climbed and gold, benefiting from safe-haven demand, surged to a record high.
Among the 11 major sectors in the S&P 500, all but consumer staples ended in negative territory, with energy and tech suffering the largest percentage drops.
Big Tech came under pressure once again, with each of the so-called Magnificent Seven group of artificial intelligence-related momentum stocks down between 2.3% and 7.3%.
CarMax slid 17.0% after the used-car retailer missed fourth-quarter profit expectations.
First-quarter earnings season kicks off on Friday with big banks, including JPMorgan Chase, Morgan Stanley and Wells Fargo due to report.
Declining issues outnumbered advancers by a 4.81-to-1 ratio on the NYSE. There were 39 new highs and 224 new lows on the NYSE.
On the Nasdaq, 867 stocks rose and 3,588 fell as declining issues outnumbered advancers by a 4.14-to-1 ratio.
The S&P 500 posted no new 52-week highs and nine new lows while the Nasdaq Composite recorded 13 new highs and 166 new lows.
Volume on U.S. exchanges was 23.65 billion shares, compared with the 18.50 billion average for the full session over the last 20 trading days.
In stock markets abroad, indexes rallied across Europe and Asia in their first chances to trade following Trump’s pause on many of his tariffs. Japan’s Nikkei 225 surged 9.1%, South Korea’s Kospi leaped 6.6% and Germany’s DAX returned 4.5%.
With reports from Reuters and The Associated Press