US Stock Market Takes a Sharp Dive – Nasdaq Nosedives 4.3%

It was a brutal day on Wall Street. Having received a brief pep rally the day before, the US stock market took a nosedive on Thursday, and the plunge was not easy to ignore – especially for tech investors. The Nasdaq was particularly hammered, losing a staggering 4.3%, and the general S&P 500 wasn’t much better, losing 3.4%. The Dow Jones Industrial Average also fell an astonishing 1,014 points, or roughly 2.5%.

So why did this sudden plunge in the markets occur?

Trump’s Tariff Twist and the Market’s Reaction

The bigger story here for this market thriller is the back-and-forth by President Donald Trump over tariffs. There was a silver lining in the middle of the week when Trump said he would delay certain tariffs for 90 days. That sparked a massive market rally on Wednesday – the Nasdaq surged over 12%, its best day since 2021. The Dow saw its largest one-day gain in five years, gaining almost 8%. But Thursday brought reality home with vengeance.

Only a couple of hours into trading, the White House announced that Chinese import tariffs were not just high – they were higher than anticipated, 145% compared to the 125% investors had prepared themselves for the previous day. This sudden surge had people panicking, panic selling. Investors who had taken the plunge into the action on Wednesday thinking that tensions were easing immediately found that they were heating up again. The outcome? Stocks dropped, in a rush.

China Fires Back And It Wasn’t Pleasant

Naturally, China did not react to this tariff measure blindly. The Chinese government complained about the action, accusing the US of using tariffs as a tool and taking a selfish interest. In trying to release their indignation, they decided to limit Hollywood film imports – something which is not likely to shake Wall Street to its core but that sends a clear message of worsening tensions.

One Chinese Foreign Ministry spokesman wasn’t coy, declaring that the US was seeking to “apply maximum pressure” with these tariffs and China would not sit idly by. This type of tit-for-tat is what investors are most afraid of a full-scale trade war that brings down global economic growth.

Who Took the Biggest Brunt?

Now, let’s talk about companies impacted the most.

Nike saw one of the largest falls of blue-chip companies. Its share fell by 8%, and that is not surprising considering its global supply chain. Foreign production and export become more expensive with trade wars and tariffs, and that is bad for a firm like Nike. Tesla, maker of electric vehicles led by Elon Musk also a Trump adviser fell by 7%. Nvidia, the international chipmaking titan, dropped 5%. Tech stocks, which were soaring 24 hours ago, took the biggest hit in this shocking turn.

But not entirely negative. Some of the telephone titans like AT&T and Verizon were just barely positive, each up nearly 1%. That’s likely because they’re considered more stable, less vulnerable to international soap operas, and less reliant on international supply chains.

How Did Other Nations React?

To the surprise of all, while US markets plummeted to the basement, Asian and European markets rose — at least during the morning.

• In Asia, countries recovered well:
• Japan’s Nikkei 225 gained over 9%.
• South Korea’s Kospi gained approximately 6.6%.
• Taiwan’s Taiex gained nearly 9.3%.
• Australia’s ASX 200 rose approximately 4.5%.

This rebound came after a week of losses that were driven by fear of a trade war. These investors took comfort in Trump’s initial wave of tariff relief though one that is perhaps temporary at best, depending on how markets are able to accommodate the new tariff rate of 145%.

Even China recovered:

• Hong Kong’s Hang Seng Index climbed 2%.
• The Shanghai Composite Index climbed 1.1%.
• The Shenzhen Component Index climbed 2.2%.

While they shouldered most of the higher tariffs, Chinese markets didn’t melt down — perhaps because they’d already prepared for the worst. Or investors simply waited to observe what China would do before freaking out.

What’s the Bigger Story Here?

At this point, the only thing that is sure is that investors are unsure. Markets love sure things, and right now anything but. There is a day when the US President puts tariffs on ice and the markets are in a state of euphoria. The next day, aforementioned tariffs return with a vengeance and investors are jumping for cover.

It’s not the tariffs themselves that are doing the creepy – it’s the yo-yo effect. When markets can swing 10% or more in either direction within a 24-hour period, it creates an atmosphere of instability. Investors also have to be global thinkers. China’s ban on Hollywood films doesn’t have to be an economic material concern but symbolic – a message that they will fight back. And in a trade war, symbols are as good as digits.

What Happens Next?

That’s the million-dollar question (or maybe the trillion-dollar question at this point). If this seesaw continues on, markets might stay volatile. We might experience more roller-coaster-like action down one day, up the next based on Washington or Beijing headlines.

Some investors will try to jump in on these dips, and some others will wait on the sidelines for things to stabilize. The coming days and weeks will be interesting. Will President Trump keep the 145% tariff rate on Chinese imports? Will China escalate further? Could the tariff relief for other countries end up providing relief to some industries?

And what will global business – especially those that are highly dependent on imports and exports do to protect their profits and supply chains?

Thursday’s decline in the stock market, or the 4.3% drop on Nasdaq, serves as a reminder that political decisions and specifically those regarding trade and foreign policy have a wonderful ripple effect on the economy. The White House’s mixed signals, China’s retaliations, and uncertainty over the future formed the perfect storm that resulted in gargantuan losses on Wall Street. For private investors, that sort of volatility is unsettling. And for corporate giants, it equals difficult decisions about prices, output, and manpower planning.

Whatever it is, one thing is sure: the future of the stock market will be a bumpy one. Hold on tight — we might be in for a rollercoaster ride.