The selloff on Wall Street that began late last week is intensifying as U.S. stock futures plunge with U.S. President Donald Trump’s tariff rates going into effect on America’s trading partners.
The benchmark S&P 500 index is down another 2% in premarket trading and set to open the U.S. trading session on April 7 in a bear market defined as a decline of 20% from recent highs.
The blue-chip Dow Jones Industrial Average is down another 1,000 points in premarket trading after falling more than 3,000 points on April 3 and 4.
And the technology-laden Nasdaq Composite index, which is already down 22% and in a bear market, is looking at starting the trading day down another 500 points or nearly 3%.
U.S. stock markets are experiencing their worst performance since the outbreak of the Covid-19 pandemic in March 2020.
The current selloff is intensifying as the U.S. imposes a baseline 10% tariff on all imports into the country, and additional tariffs of more than 30% on countries such as China and Vietnam.
Despite the market crash, President Trump and his administration have shown no willingness to alter course on their protectionist trade policies.
Over the weekend, Trump said that he doesn’t want stocks to go down, “but sometimes you have to take medicine.”
Trump’s unilateral 10% tariff on all U.S. imports went into effect on April 6. Investors were hoping for news over the weekend that the Trump administration would lower at least some of the tariff rates.
Instead, Trump and his advisors played down the market meltdown.
Investors were surprised by the magnitude of certain tariff rates applied to trading partners that appear to be based on a made-up formula that’s not established economic theory.
Investors were rattled even more when China decided to retaliate with a 34% tariff on all U.S. imports, instead of negotiating with the Trump administration.
Also in recent days, the U.S. Federal Reserve indicated that it will not be coming to the markets rescue anytime soon with an interest rate cut.
Speaking to the media, U.S. Fed Chair Jerome Powell said that the tariffs are likely to spark a rise in inflation and the central bank would wait to see the impacts on the economy.
The market selloff in the U.S. has spread to other parts of the world, with European and Asian stock indices also falling sharply. Japan’s main index was down as much as 7% on April 7.