Economic Release
US: Market Reflections
Date: April 3, 2025 12:00 AM CT
Highlights
Fallout from President Trump's far more aggressive than expected tariff plans spurred recession and inflation worries and a massive global flight from risk assets Thursday. The Dow Jones industrial average dropped 4.0 percent, the S&P 500 fell 4.8 percent, and the Nasdaq plunged by a remarkable 6.0 percent. The indexes ended near the day's worst levels. US bond yields dropped by 2-15 basis points, led by the short end, a tremendous one-day move. The dollar tanked as Trump's plans appear to have undercut the traditional view that it represents a safe haven in times of trouble. Oil dropped on worries about recession and slowing demand.
The dramatic reaction to much more bearish than expected tariff news was aggravated at midmorning by weaker than expected results from the ISM services index, which dropped to a barely positive 50.8 in March from 53.5 in February, well below the expected 53.0, with signs that business activity in the dominant services sector is set to continue shrinking in response to the tariff shock. President Trump's comment that the rollout of tariffs was going well added to the bearish market view.
Heavily weighted megacaps were among the hardest hit stocks, which added to the magnitude of the selloff in the major averages. Apple was a featured loser as it is seen among the most exposed to supply chain disruptions and rising costs given huge US tariffs imposed on China and Taiwan. Among sectors, worst hit were communications services, technology, consumer discretionary, energy, industrials and materials. Consumer discretionary held up relatively well in the overall downdraft as it is regarded as a defensive play in a recessionary market.
The dramatic reaction to much more bearish than expected tariff news was aggravated at midmorning by weaker than expected results from the ISM services index, which dropped to a barely positive 50.8 in March from 53.5 in February, well below the expected 53.0, with signs that business activity in the dominant services sector is set to continue shrinking in response to the tariff shock. President Trump's comment that the rollout of tariffs was going well added to the bearish market view.
Heavily weighted megacaps were among the hardest hit stocks, which added to the magnitude of the selloff in the major averages. Apple was a featured loser as it is seen among the most exposed to supply chain disruptions and rising costs given huge US tariffs imposed on China and Taiwan. Among sectors, worst hit were communications services, technology, consumer discretionary, energy, industrials and materials. Consumer discretionary held up relatively well in the overall downdraft as it is regarded as a defensive play in a recessionary market.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
