Markets Slide as Trade War Heats Up

Markets Slide as Trade War Heats Up

This past week was a tough one for investors. Stocks dropped sharply after China announced 34% tariffs on all U.S. goods starting April 10. In response to U.S. trade actions, China also added American companies to its “unreliable entities list” and began an antitrust investigation into DuPont, which saw its stock fall over 11%.

The impact on markets was immediate. All three major U.S. indexes finished the week lower, with the Nasdaq officially entering a bear market (down more than 20% from recent highs). This was the worst daily drop for the markets since June 2020.

Federal Reserve Chair Jerome Powell spoke cautiously, saying the Fed will take a "wait-and-see" approach to interest rates. He warned that these new tariffs could lead to higher inflation and slower economic growth.

Investors Brace for Recession

JPMorgan now sees a 60% chance of a global recession. Investors are pulling money out of stocks and moving it into safer assets like gold, government bonds, and the Japanese yen. Oil prices dropped to a four-year low, while traders started betting on multiple interest rate cuts from the Fed—possibly up to five cuts this year.

Even strong job numbers couldn’t calm the markets. The U.S. added 228,000 jobs in March, but unemployment ticked up to 4.2% as more people entered the job market. Wage growth remained modest, and investors stayed focused on the bigger picture: trade tensions and slowing global growth.

Big Winners and Losers This Week

Winners:

• Defensive Stocks: When markets get rough, investors tend to look for safety. Sectors like utilities (e.g., Waste Management), telecoms (e.g., Verizon, AT&T), food (e.g., Mondelez, Kraft Heinz), and healthcare (e.g., Pfizer, Johnson & Johnson) gained ground.
• Dollar General (+7.57%): This discount retailer is seen as “recession-proof,” as more people look for lower-cost options during tough economic times.

Losers:

• Consumer Brands with Asian Ties: Companies like Nike, Lululemon, and Deckers fell sharply. Many of their products are made in Asia, and the new U.S. tariffs—ranging from 32% to 49% on countries like Vietnam and Cambodia—hit them hard.
• Apple (–6.94%): Apple relies heavily on China for iPhone production. Any disruption there is a big deal for its supply chain.
• Boeing and Caterpillar: Both dropped over 5% as they’re major exporters to China.
• Tesla (–10.33%): Trade tensions added to existing concerns over weak Q1 deliveries.
• NVIDIA (–7.29%): Despite leading in AI, worries about global tech sales weighed on the stock.
• Banks like JPMorgan, Citigroup, and Wells Fargo: These all fell by 6%–8% as fears of a trade-driven slowdown grew.

Commodities Take a Hit

• Oil: Prices dropped about 10%. The trade war could lower demand, and OPEC+ unexpectedly announced a big production boost for May—over 400,000 extra barrels a day.
• Metals: Copper dropped to $8,915 as trade worries hurt demand. Aluminum, nickel, and zinc also fell. Gold hit an all-time high of $3,167 before dipping again due to traders selling to cover losses elsewhere.
• Agricultural Products: Wheat, corn, and soybeans slid too. Much of U.S. grain is exported, so tariffs are a direct hit.

Bottom Line

Trade tensions are shaking markets and creating big winners and losers. If you’re investing, keep an eye on defensive sectors and watch how global trade developments unfold. Uncertainty is high, and the Fed’s next moves could shape what happens next.