Market Update April 4, 2025… Retaliation & Recession

I started my commitment to send clients my Market Update in December of 2018. It has been when two or more major U.S. stock indices drop >3% on the same day ever since.  I was hoping I would not have to send it today, but there was another stock market sell-off again today. On the third worst point loss day in history for the Dow and with all major indexes falling by about 5%, today was certainly timely and relevant for my Market Update. Today is the first time I have sent out back-to-back Market Updates since February 24 and February 25 of 2020. The stock market was mauled by the bear then and again now.

Today was exceptional, and the week was extreme for the U.S. stock market. The stock market suffered massive losses in the past week, going almost straight down after the Trump tariffs announcement late Wednesday. The Dow Jones Industrial Average dived 7.5% in the week’s stock market trading, hitting an eight-month low, losing almost 4,000 points just on between yesterday and today. The Dow fell over 2200 points today and for the first time in history it fell over 1500 points and back to back trading days. Today’s Dow drop was its third most in point terms in history; yesterday was its fourth. The S&P 500 index plunged 9.1% and the Nasdaq composite 10%, both marking 11-month lows. The small-cap Russell 2000 sold off 9.7% to the lowest since late 2023, all this week. The S&P is lost $5 trillion of market value in 2 days. 84% of the SP 500 stocks are in correction and more than 60% are in bear market mode. Oil prices slid further today, with benchmark U.S. crude falling to about $62 a barrel, the lowest level since 2021 if they settle there. Some of the major indexes are now in bear market territory, down >20% from recent highs.

The CBOE Volatility Index, or VIX, skyrocketed to its highest level since August 2024, even marking its highest close since 2020. The fear gauge could be signaling at least a short-term market bottom soon.

The table below shows today’s market moves.

I can’t remember a time when the monthly jobs report was an afterthought. It was mostly positive and quickly forgotten by Wall Street as it had bigger concerns to focus on. They were China and the Fed. The announcement that China intends to impose additional 34% tariffs on US goods, matching the increase proposed by President Trump on Wednesday, trumped the March Jobs Report. China shocked stocks and seemed to catch markets by surprise. This was the first of the “what else did you expect them to do?” moments today. The other was from Jerome Powell. After a mid-morning plunge reversed somewhat, stocks fell again after Chair Powell expressed disincline when deciding to cut rates during tariff uncertainty.

The jobs report itself did little to change market sentiment, despite a startling increase in March Nonfarm Payrolls. Those increased by 228,000, well above the 140k consensus. Instead, investor sentiment was indeed moved by China’s retaliatory tariffs. Again, market mover #2 today was the Fed. Chief Powell said that he still wants more “clarity” about Trump tariffs’ impact on growth and inflation, which may be greater than perhaps previously expected. He stressed that he doesn’t think the Fed needs to be in a “hurry” to respond, suggesting policymakers won’t cut rates at the May 7 meeting.

Dow Jones futures will open at 6 p.m. ET Sunday evening, along with S&P 500 futures and Nasdaq futures, after Trump tariffs trigger the major indexes’ worst week since the March 2020 Covid crash.  The Nasdaq and Russell 2000 tumbled into bear market territory, with the Dow Jones and S&P 500 moving that direction.

Market panics and subsequent recoveries are part of the economic cycle. What is crucial is how we navigate the uncertainty and reshape the future from the lessons learned. This underscores the cyclical nature of markets and the importance of resilience during turbulent times.