Wall Street’s worst crisis since COVID slammed into a higher, scarier gear Friday.
The S&P 500 lost six per cent after China matched U.S. President Donald Trump’s big raise in tariffs announced earlier this week. The move increased the stakes in a trade war that could end with a recession that hurts everyone. Not even a better-than-expected report on the U.S. job market, which is usually the economic highlight of each month, was enough to stop the slide.
The drop closed the worst week for the S&P 500 since March 2020, when the pandemic crashed the economy. The Dow Jones industrial average plunged 2,231 points, or 5.5 per cent Friday, and the Nasdaq composite tumbled 5.8 per cent to pull more than 20 per cent below its record set in December.
Canada’s main stock index, S&P/TSX, closed down 1,142 points. Although it was one of the biggest single-day point changes since 2020, the 4.6 per cent loss didn’t crack the top twenty for worst ever single-day losses, showing that we’ve weathered sharper drops before.
So far, there are few, if any winners, in financial markets from the trade war. Stocks for all but 12 of the 500 companies that make up the S&P 500 index fell Friday. European stocks saw some of the day’s biggest losses, with indexes sinking roughly five per cent. The price of crude oil tumbled to its lowest level since 2021.
Other basic building blocks for growth, such as copper, also saw prices slide sharply on worries the trade war will weaken the entire global economy.
China’s response to U.S. tariffs caused an immediate acceleration of losses in markets worldwide. The Commerce Ministry in Beijing said it would respond to the 34 per cent tariffs imposed by the U.S. on imports from China by imposing a 34 per cent tariff on imports of all U.S. products beginning April 10.
The United States and China are the world’s two largest economies.
“The market’s reaction is delivering a verdict and we should take that seriously,” Brendan LaCerda, director of economic research at Moody’s Analytics, told CBC News.
Investors hadn’t expected Trump’s tariffs to be as high as they were, or China’s retaliation to be as strong, he said. As investors react to this and crunch the numbers on their profit forecasts, “the outlook is just turning decidedly darker.”
“Where does the market find its bottom?” he said. “That’s a little bit of an open question.”
Even though Canada was one of the few countries that didn’t get struck with additional “reciprocal” tariffs on Wednesday by the U.S., Canadian markets are still fluctuating amid the global instability.
The losses on Friday are “stunning, but not…
Read More: Markets plunge worldwide for a second day straight following China’s tariff
