The global stock market crash is coming! As the Sino-US trade war heats up, US stocks record their biggest drop in years

Tech Stocks Lead Decline, Panic Index Breaks 40, Wall Street Worried About Entering Bear Market and Recession Storm

The US stock market suffered a severe decline for the second consecutive day after China announced new tariffs on US goods, triggering global trade war escalation concerns. As investors worry that the Trump administration's hard-line stance could lead to a global economic recession, all three major stock indices plummeted, creating the most brutal decline since the outbreak of the COVID-19 pandemic.

Dow Jones Plunges Over 2200 Points, US Stocks Create Record Decline for Two Consecutive Days

On Friday, the Dow Jones Industrial Average plummeted 2,231.07 points, a decline of 5.5%, closing at 38,314.86 points, the largest single-day drop since the pandemic peak in June 2020. This is the second consecutive day of a sharp decline for the Dow Jones, having dropped 1,679 points on Thursday, creating a historical record of two consecutive days of drops exceeding 1,500 points.

The S&P 500 Index also fell sharply by 5.97%, closing at 5,074.08 points, its worst single-day performance since March 2020. Over these two days, it has dropped more than 10%, falling over 17% from its recent high point, entering a technical correction zone.

The Nasdaq Composite Index was also hammered, plunging 5.8% to 15,587.79 points on Friday. This represents a nearly 12% decline over two consecutive days, and from its peak in December last year, it has dropped over 22%, officially entering a bear market.

China Imposes 34% Retaliatory Tariffs, US-China Rivalry Heats Up

The main cause of the market's violent fluctuations was the Chinese Ministry of Commerce's announcement on Friday to impose retaliatory tariffs of up to 34% on all US goods, directly responding to the Trump administration's recent tariff measures. While the market had hoped for negotiation space, China's action clearly signaled a "hard-line" approach, causing investor confidence to collapse.

Tech Giants Plummet, Apple and NVIDIA Weekly Decline Breaks 10%

Friday's market sell-off was led by tech stocks. Apple's stock price plunged 7% in a single day, with a cumulative weekly decline of 13%. AI leader NVIDIA also dropped 7%, while Tesla plummeted 10%. These three companies have significant business in the Chinese market, making them direct victims of Beijing's retaliatory tariffs.

Other companies with high export dependence on China were also affected. Boeing fell 9%, and heavy machinery manufacturer Caterpillar dropped nearly 6%, becoming the two major culprits dragging down the Dow Jones.

Beijing Escalates Retaliation, Launches Antitrust Investigation Against US Companies

China's retaliation did not stop at tariffs. The Beijing authorities also added multiple US companies to the "unreliable entity list" on the same day, citing violations of market rules or failure to fulfill contracts. Additionally, China launched an antitrust investigation against US chemical giant DuPont, causing DuPont's stock to plummet nearly 13% on the news.

These actions further undermined market confidence and made investors worry that the China-US conflict has entered a full-scale economic confrontation stage.

Panic Spreads, Funds Rush into Debt Market for Hedging

As market panic intensifies, investors began massively shifting to safe-haven assets like government bonds. The 10-year US Treasury yield fell below 4% on Friday, indicating rapid fund inflows into the bond market. Meanwhile, the CBOE Volatility Index (VIX), which measures market panic, surged to over 40, an extreme level typically seen only during severe stock market crashes.

Trump Maintains Tariff Stance, Market Fears Further Escalation over the Weekend

Despite two consecutive days of brutal market crashes, former US President Trump remained adamant. He posted on Truth Social on Friday: "My policies never change." Market experts are concerned that as the weekend approaches, the trade war may continue to escalate, with the US showing no signs of backing down.

"What the market fears most is that this trade war will continue to worsen, and the United States has no room for compromise," said Jay Woods, Global Strategy Director at Freedom Capital Markets.

US Stocks Have a Dismal Week, Worst Performance Since Pandemic

After a week of violent fluctuations, the S&P 500 index fell by as much as 9% for the week, the worst weekly performance since the early days of the COVID-19 pandemic. Investors fear that if the trade war continues to escalate, the global economy will fall into a long-term recession, and the stock market bear market has just begun.

As Emily Bowersock Hill, CEO of Bowersock Capital Partners, said: "This bull market has ended, destroyed by ideology and self-destructive policies. Even if it may bottom out in the short term, the long-term damage to the global economy from the trade war will be profound."