U.S. stock futures plunged early Monday as the White House remained defiant even after a two-day historic stock market rout that followed President Donald Trump’s announcement of shockingly high tariff rates on most key U.S. trading partners.
Dow Jones Industrial Average futures fell 1,033 points (2.68%), pointing to another brutal trading session ahead. S&P 500 futures shed 3.34% and Nasdaq-100 futures lost 4.26% as investors continued to sell off their once-successful tech stocks to raise cash.
Unprecedented Market Collapse Last Week
- The Dow posted back-to-back losses of more than 1,500 points for the first time ever, including a 2,231-point plunge on Friday
- The S&P 500 dropped 6% on Friday – its worst performance since the pandemic outbreak in March 2020
- The benchmark lost 10% in two days, falling more than 17% below its February record, perilously close to the 20% bear market threshold
- The Nasdaq Composite entered a bear market on Friday – down 22% from its record – after losses of nearly 6% on both Thursday and Friday
Investors did not receive the anticipated news over the weekend about successful negotiations between the Trump administration and foreign partners regarding lower tariff rates, or at least a postponement of the so-called reciprocal tariffs set to take effect on April 9. The initial unilateral 10% tariff went into effect on Saturday.
Trump Administration Stands Firm
The president and his key advisors instead downplayed the market selloff:
- Trump said Sunday evening about the market decline: “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”
- Trump added: “We have a trillion-dollar trade deficit with China, hundreds of billions of dollars a year we lose with China. Unless we solve that problem, I’m not going to make a deal.”
- Commerce Secretary Howard Lutnick told CBS News that the tariffs would not be postponed: “The tariffs are coming… They are definitely going to stay in place for days and weeks.”
- Treasury Secretary Scott Bessent noted to NBC News that more than 50 countries have approached the administration for negotiations, but cautioned “they’ve been bad actors for a long time, and it’s not the kind of thing you can negotiate away in days or weeks.”
Investors were first surprised by the magnitude of certain rates applied to trading partners that appeared to be based on a formula without valid rationale according to established economic theory. They were further rattled when China decided on Friday to retaliate with a 34% tariff on all U.S. imports, instead of negotiating.
“Trump’s Liberation Day last Wednesday triggered annihilation days on Thursday and Friday, with the stock market vigilantes giving a costly thumbs-down to Trump’s reign of tariffs,” wrote Ed Yardeni, president and chief investment strategist of Yardeni Research, in a note to clients Sunday.
Foreign Partners’ Reactions and Market Impact
While the administration said at least 50 nations had reached out to begin negotiations, Canada and the European Union were planning to follow China’s lead and were preparing retaliatory tariffs against the U.S. Vietnam has already offered to reduce tariffs on the U.S. to zero, according to Trump, but they appear to be the exception so far.
Fears grew on Wall Street that the sell-off would feed on itself with hedge funds forced to sell down equities and other risky assets to raise cash and meet margin calls. The CBOE Volatility Index, Wall Street’s fear gauge, closed Friday at 45, an extreme level typically seen only during bear markets.
“Margin calls are going out as we speak,” said Chris Rupkey, chief economist at FWDBONDS. “For a third straight day investors in U.S. equity markets have turned a huge thumbs down on the White House Liberation Day tariffs which have rocked Wall Street.”
Bitcoin, which usually trades like another large tech stock but had defied the broader market meltdown last week, fell below $80,000 on Sunday, another sign of de-risking on Wall Street.
Global markets tumbled as they opened, starting with Asia. Japan’s Nikkei 225 plunged 8%.
