Wall Street stocks slumped sharply on March 4, 2025, as worries about the newly imposed U.S. tariffs on major trade partners heightened concerns over global trade tensions and their potential to curb economic growth. The Dow Jones Industrial Average fell 394.50 points, or 0.91%, to 42,796.74, the S&P 500 saw a decrease of 40.78 points, or 0.70%, closing at 5,808.94, and the Nasdaq Composite dropped 86.90 points, or 0.47%, to 18,263.29.
Earlier on March 3, the S&P 500 faced its largest single-day decline of the year amid rising anxieties over tariffs introduced by President Donald Trump. The tariffs, which took effect early on the 4th, included new 25% tariffs on imports from Canada and Mexico and doubled tariffs on Chinese goods to 20%. This sudden escalation has prompted fears of inflation and disrupted investor confidence.
Following the announcement, Beijing and Ottawa swiftly announced retaliatory tariffs affecting various U.S. imports. For example, on March 3, Trump confirmed his administration would impose tariffs aimed at bolstering domestic manufacturing jobs. This decision has been met with skepticism by investors who worry about the long-term impact on companies with international exposure.
Several prominent companies were particularly affected by the turmoil. Tesla (TSLA) shares were down nearly 7% on March 4 and have suffered losses of about one-third of their value since the beginning of the year. Meanwhile, major retailers like Best Buy (BBY) and Target (TGT) also faced significant stock drops. Best Buy’s shares plummeted nearly 15% after the company signaled inflation and tariff uncertainties would negatively affect its sales outlook. Target reported stronger-than-expected earnings but cautioned about persistent consumer uncertainty and potential impacts from tariffs, leading its stock to drop 6%.
The financial services sector was heavily affected as well, with stocks of major banks including Goldman Sachs (GS), JPMorgan Chase (JPM), and American Express (AXP) each falling more than 5%. The S&P 500 financial services sector overall was down nearly 4%, indicating broad displeasure among investors.
Adding to the market's unease, the CBOE Volatility Index (VIX), known as Wall Street's fear gauge, increased to its highest level since mid-December 2024. Following the tariff announcement, analysts predicted this would affect domestic profit margins and stifle consumer spending due to increased prices on goods.
Gold prices rose on March 4, benefiting from the economic uncertainty and increasing demand as a safe haven asset. Spot gold was priced at $2,918.90 per ounce by mid-morning, reflecting growth driven by investor hesitance about stock market stability. Concurrently, Bitcoin also saw fluctuations, trading at $82,400, after peaking around $95,000 the day before due to announcements of sprawling economic policies.
The 10-year Treasury yield fell to 4.14%, down from 4.18% the previous day, signifying detrimental investor sentiment and the decline of major financial assets. This marks the lowest yield since early December, as investors adjust to anticipated economic impacts from tariffs.
The repercussions of these tariffs extend beyond immediate market reactions, reflecting on how companies will adapt to these challenges moving forward. Businesses fear a slowdown stemming from reduced consumer spending due to rising prices, not to mention corporations struggling with diminished profitability as they grapple with increased operational costs due to tariffs.
Despite the gloomy outlook for many companies, some stocks noted gains amid the chaos. Shares of Walgreens Boots Alliance (WBA) surged more than 6% after reports surfaced about the company nearing a roughly $10 billion deal to go private. This marked a rare light for investors against the backdrop of plummeting stock values across the market.
Moving forward, market analysts suggest close monitoring of the effects of Trump's tariffs on inflation trends and overall economic growth. This period of uncertainty could usher in volatility on Wall Street, emphasizing the need for investors to remain vigilant and adaptable to changing market conditions.
All eyes will remain on the upcoming weeks to assess how the tariffs impact businesses and, by extension, the broader economy. With heightened fears of recession lurking on the horizon, market performance will likely serve as a major barometer for investor confidence.