01:43 PM EDT, 04/03/2025 (MT Newswires) -- US equity indexes plummeted amid sharp declines in government bond yields and the dollar as concern mounted that the Trump administration's punitive tariff hikes would spark a global trade war and slash economic growth.

The Nasdaq slumped 5.1% to 16,698.1, with the S&P 500 down 4% to 5,443.5 and the Dow 3.2% lower at 40,884.1 after midday Thursday. All sectors except consumer staples were down intraday. Consumer discretionary, technology, and energy dropped more than 5.6% each, making them the steepest decliners.

Canada, China, and Europe are pondering their response to punitive import duties that President Donald Trump unveiled late Wednesday. The CBOE's Volatility Index, also known as the fear gauge, soared 27% to 27.37 intraday.

"Trump has imposed the steepest and harshest American tariffs in a century on all its major counterparts, sparking threats of retaliation and a broad selloff around the world on concerns that a global trade war on this scale and magnitude will drive an economic slowdown," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.

Anderson Economic Group said in a report that auto tariffs will likely cost US car buyers about $30 billion in the first year, assuming carmakers will absorb some of the costs. Investors and employees of manufacturers, suppliers, and dealers are expected to absorb at least another $30 billion in tariff costs during this same time.

"Our US economists will need to work through the full implications, but their initial read is that, if implemented, this could easily knock around 1% to 1.5% off US growth this year while adding a similar amount to core PCE," the Federal Reserve's preferred inflation measure," Jim Reid, head of global fundamental credit strategy at Deutsche Bank, said.

The ICE US Dollar Index plunged 1.4% to 102.09 as the greenback weakened amid concern that import levies will also hurt economic growth in the United States.

Almost all US Treasury yields dropped, with the 10-year yield sliding 15.3 basis points to 4.04% and the two-year rate 18.1 basis points lower at 3.72%. According to the CME Group's FedWatch Tool, the probability of a 25 basis-point interest-rate cut in May climbed to 23% on Thursday from 11% a day ago.

In economic news, the Institute for Supply Management's US services index fell to 50.8 in March from 53.5 in February, compared with expectations for 52.9 in a Bloomberg-compiled survey. A drop below the 50 threshold indicates contraction.

Outplacement firm Challenger, Gray & Christmas reported 275,240 layoff intentions in March, up from 172,017 job cuts in the previous month and the largest monthly total since May 2020 amid the COVID-19 pandemic. The Department of Government Efficiency announced 216,670 of those layoffs.

In company news, Lamb Weston ( LW ) reported stronger-than-expected fiscal Q3 results as volume gains helped offset lower prices and reiterated its full-year outlook. Shares jumped 9% intraday, the top performer on the S&P 500.

RH (RH) shares slumped 39% intraday, among the worst performers on the S&P 500, after the firm reported overnight fiscal Q4 adjusted earnings and sales that trailed analysts' estimates.

Nike's ( NKE ) shares dropped 12% intraday, the steepest decliner on the Dow, after President Trump announced tariff hikes on several major apparel-exporting countries.

Meanwhile, the West Texas Intermediate crude oil futures plunged 6.9% to $66.79 a barrel.

Gold futures dropped 1.3% to $3,123.70 per ounce. Silver futures sank 7.8% to $31.96 per ounce.