Last week marked a dramatic decline in the equity markets, driven by escalating trade tensions and fears of a recession. President Donald Trump’s announcement of “Liberation Day” tariffs on imports triggered the worst single-day selloff since early 2020.
The Dow Jones Industrial Average dropped more than 3,200 points last week (-7.9%), entering correction territory (10% drop from its recent peak). The Nasdaq Composite plunged 10%, entering bear market territory (20% drop from its recent peak). The S&P 500 fell over 9% during the week.
Trump’s tariffs range from a baseline of 10% to as high as 54%, depending on reciprocal duties and nonmonetary measures imposed by other nations. This sparked fears of stagflation (a combination of stagnant growth and persistent inflation) as global trade disruptions loom large. China then retaliated with matching tariffs of 34% on all U.S. imports.
The S&P 500 energy sector was the weakest group, suffering a decline of 15%. Eight key OPEC+ producers on Thursday agreed to raise combined crude oil output by 411,000 barrels per day, speeding up the pace of their scheduled hikes. The combination of increased crude production along with fears of demand plummeting in the face of a possible global recession caused the price of WTI Crude Oil to shed more than 10% during the week, leaving the price per barrel at $62.
The technology and financial sectors were also shed over 10%. Among the mega-cap tech stocks were hit the hardest were names like Apple (AAPL), NVIDIA (NVDA), and Meta Platforms (META).
The yield on the 10-yr US Treasury dropped 27 basis points this week to 3.99%. Also, the CBOE Volatility Index (VIX), referred to as the “fear gauge,” peaked above 45.0 as investors position for more volatility and downside risk.