New York Stock Exchange Collapses Due to Trump Tariffs…$2 Trillion Wiped from S&P

S&P500 Index Closes Down 4.84% at 5,396.52

Investors Flock to Safe-Haven Treasury Bonds

Trump: "Stocks Will Surge…Tariffs are a Surgical Procedure"

On the 3rd (local time), the day after U.S. President Donald Trump announced a 10% base tariff and reciprocal tariffs, all three major indices of the New York Stock Exchange plummeted. Concerns about inflation and economic recession due to tariffs and a global trade war have increased.

On this day, the S&P500 index re-entered the correction zone and recorded the largest daily drop since 2020. The S&P500 index closed down 4.84% at 5,396.52, marking the worst day since June 2020. The market capitalization of the 500 largest U.S. companies that make up the S&P500 index was estimated to have evaporated by about $2 trillion in a single day.

The Dow Jones index fell 1,679.39 points (3.98%) to close at 40,545.93, also showing the largest drop since June 2020. The Nasdaq Composite Index plunged 5.97% to close at 16,550.61, the biggest drop since March 2020. On the New York Stock Exchange, the number of declining stocks outnumbered advancing ones by 6 to 1.

Due to this crash, the S&P500 index fell to levels seen before President Trump's November election victory. This benchmark index is currently about 12% below the all-time high recorded in February.

Global companies also took a big hit. Nike and Apple fell 13% and 10%, respectively, and companies that mainly sell imported goods were particularly hard hit. Five Below plunged 26%, Dollar Tree fell 12%, and Gap dropped 21%. The overall risk-averse sentiment also weakened tech stocks, with Nvidia down 7% and Tesla down 5%.

Mary Enbatel, chief investment strategist at Sanctuary Wealth, analyzed on CNBC, "This tariff was the worst-case scenario and was not reflected in the market at all. That's why we're seeing such an extreme risk-averse reaction now."

On this day, investors flocked to safe-haven assets, namely Treasury bonds. As a result, the yield on the 10-year U.S. Treasury bond fell to near 4% per annum, and bond prices rose.

Economists at JPMorgan stated, "If this new tariff rate persists and cannot be lowered through negotiations, the likelihood of a recession is high."

On the same day, President Trump commented on the stock market plunge, likening the introduction of tariffs to a "surgical procedure." He said, "The market will regain its vigor, and stocks will surge," adding, "The U.S. economy will boom, and the world will want to find ways to trade with the U.S."

Meanwhile, Brad Gerstner, CEO of Altimeter Capital, appeared on CNBC and said that CEOs of major U.S. corporations believe that President Trump's tariff policy announced the previous day is excessive and will harm the U.S. economy.

He stated, "I spoke overnight with about 10 CEOs of the largest U.S. companies belonging to the Business Roundtable, and they all said this policy is a 'huge mistake.'" Although CEO Gerstner did not specify names, the Business Roundtable includes CEOs from various industries, including Apple, Bank of America, Boeing, and FedEx.

Brad Gerstner, CEO of Altimeter, said, "The tariff policy announced by President Donald Trump on Wednesday is excessive and will harm the U.S. economy."

New York Correspondent Shin-Young Park nyusos@hankyung.com