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Second day of chaotic sell-off since Trump tariff

announcement

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Global recession fears grow as retaliation begins

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Fed Chair Powell warns of tariff impact on inflation

(Updates to close)

By David French

April 4 (Reuters) -

Wall Street nosedived for a second straight day on Friday,

with the Nasdaq Composite confirming a bear market and the Dow

Jones Industrial Average entering a correction, as an escalating

global trade war spurred the biggest losses since the pandemic.

Fallout from U.S. President Donald Trump's sweeping

tariffs stoked fears of a global recession, wiping trillions of

dollars of value from U.S. companies. Declines on indexes were

the heaviest since the pandemic during Trump's first term.

The Nasdaq Composite's slide confirmed a bear market

for the tech-heavy index, compared to its record closing high of

20,173.89 on December 16.

Meanwhile, the Dow Jones Industrial Average

confirmed a correction to its record closing high of 45,014.04

on December 4.

Since late on Wednesday, when Trump boosted tariff barriers

to their highest level in more than a century, investors have

dumped stocks, fearing both the new U.S. economic reality and

also how U.S. trading partners might retaliate by steepening

their own trade barriers.

The CBOE Volatility index, or Wall Street's fear

gauge, hit its highest level since August.

China's finance ministry said it would impose additional

tariffs of 34% on all U.S. goods from April 10.

Markets then dropped further on talks between the prime

ministers of Britain, Australia and Italy on how to respond to

Trump's tariff salvo.

"Right now, how bad it gets depends on how committed the

administration is to this set of policies which, clearly, the

market is voting again," said Steve Sosnick, chief strategist at

Interactive Brokers.

According to preliminary data, the S&P 500

lost 322.72 points, or 5.95%, to end at 5,073.80 points,

while the Nasdaq Composite lost 962.82 points, or 5.80%,

to 15,587.79. The Dow Jones Industrial Average

fell 2,237.52 points, or 5.52%, to 38,314.49.

Earlier, investment bank JP Morgan said it was forecasting a

60% chance of the global economy entering a recession by

year-end, up from 40% previously.

Federal Reserve Chair Jerome Powell spoke publicly for the

first time since Trump's tariff announcement. Powell highlighted

that the unexpectedly hefty tariffs could trigger higher

inflation and slower growth, setting the stage for challenging

decisions for U.S. central bankers.

Traders still anticipated a more accommodative Fed policy,

with money market futures pricing in cumulative rate cuts of 100

basis points by the end of 2025, compared with about 75 bps a

week earlier.

Safe-haven buying in the bond market sent the yield on the

benchmark 10-year Treasury notes to touch a

six-month intraday low.

This pushed U.S. bank stocks down further, with the sector

under pressure globally, as the prospect of interest rate cuts

from central banks and a hit to economic growth from tariffs

would crimp profitability. The S&P Banks index dropped.

All 11 S&P sectors were down significantly, with energy

the leading laggard for the second straight day, as

companies tracked a 7.3% decline in U.S. crude prices.

U.S.-listed shares of Chinese companies dived, including

JD.com ( JD ) and Alibaba ( BABA ) and Baidu ( BIDU ).

Companies with exposure to China also fell across the board,

with mega-caps such as Apple ( AAPL ) dropping.

The chipmakers index sank once again. The sector is

particularly vulnerable to both China and U.S. tariffs as many

chip companies design their chips in the U.S., but have them

manufactured in China, potentially hitting them with a

double-whammy of levies.