US equities fell sharply on Thursday, reversing part of the prior session’s explosive rally, as investors weighed President Donald Trump’s partial tariff pause against lingering concerns over China and the broader economic outlook.
The Dow Jones Industrial Average dropped 629 points, or 1.6%, while the S&P 500 fell 2.1%.
The Nasdaq Composite tumbled 2.9%, with tech leaders dragging the index lower. Apple declined 3.8%, Tesla sank 5%, Nvidia lost 4%, and Meta Platforms shed 1.7%.
The rally to remember
Thursday’s sell-off followed a historic rally that sent the S&P 500 soaring more than 9% on Wednesday — its third-largest single-day gain since World War II.
The Dow logged its biggest percentage jump since March 2020, and the Nasdaq posted its second-best day on record, behind only January 2001.
Trading volume hit an unprecedented 30 billion shares, the highest level in at least 18 years.
The market euphoria was fueled by Trump’s announcement of a 90-day pause on most of his planned reciprocal tariffs, slashing rates for many countries to 10%.
Canada and Mexico were excluded from any new duties, while the European Union followed up Thursday with its own 90-day freeze on retaliatory tariffs against US goods.
Despite the short-term relief, the tariff rate on Chinese imports remains at a punitive 125%, underscoring the unresolved core of the trade dispute.
“They were getting yippy,” Trump said on Wednesday, referring to nervous investors. “I thought that people were jumping a little bit out of line.”
The market’s pullback reflects skepticism about how much relief the tariff pause truly provides, with some analysts warning that the reprieve is unlikely to offset broader pressures.
“The increase in China tariffs but delay in others leaves the effective tariff rate at 23%, at historical highs,” wrote Morgan Stanley chief US economist Michael Gapen. “Delays help, but do not reduce uncertainty.”
LPL Financial chief economist Jeffrey Roach echoed the sentiment, noting that the 90-day pause may not prevent further market turbulence. “Hard data from the early part of the year suggests the economy is slowing, irrespective of trade policy,” he said.
US inflation data
New inflation data released Thursday showed consumer prices rose 2.4% year-over-year in March, coming in below expectations of a 2.6% increase.
Core inflation, which excludes food and energy, rose 0.1% in March, easing from a 0.2% increase in February.
On a year-over-year basis, core inflation rose 2.8%—the slowest annual pace since March 2021.
While that may provide some room for the Federal Reserve to ease monetary policy, market participants appear to be waiting for more concrete signals before reassessing risk.
The data comes amid rising tensions between President Trump and Federal Reserve Chair Jerome Powell.
While Powell has maintained that rate cuts are unlikely without clear evidence of sustained disinflation, Trump has publicly called for immediate rate reductions.
In a recent speech, Powell expressed concern that the full implementation of Trump’s tariffs could rekindle inflationary pressures, further complicating the Fed’s policy path.
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