New York – CNN – US stocks were battered by a sell-off Friday after China retaliated against the United States for President Donald Trump’s tariffs in a tit-for-tat that escalates a global trade war. The Dow fell more than 1,600 points, or 4%, and the broader S&P 500 was 4.7% lower. The tech-heavy Nasdaq Composite was 5.3% lower.
Investors had been fearful that a dramatic escalation of the trade war could plunge the US and global economies into a recession. JPMorgan analysts said Thursday that America’s economy and the broader world economy both had a 60% chance of sinking into a recession this year. The analysts also said odds of a recession would rise if countries began to retaliate against the United States — and China did so Friday. Retaliation raises the risk of further escalation and could diminish hopes for negotiation.
“Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade,” said Matt Burdett, head of equities at Thornburg Investment Management. “The tariffs have injected a level of uncertainty and volatility we haven’t seen since the early days of the pandemic.”
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