U.S. Stocks Fall, Wiping Out More Than $3 Trillion in Market Value

Summary

WSJ What’s News: April 3, 2025 Episode Summary

Title: U.S. Stocks Fall, Wiping Out More Than $3 Trillion in Market Value
Host: The Wall Street Journal
Release Date: April 3, 2025

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1. Massive Decline in U.S. Stock Markets

The episode opens with Alex Osola highlighting an unprecedented downturn in the U.S. stock markets:

"[...] US stocks have suffered their biggest single day wipeout in market value since the COVID rout in March 2020. Dozens of household name stocks posted double-digit declines, including HP, Nike, and Target."
— Alex Osola, [00:54]

Key Statistics:

• Dow Jones Industrial Average: Fell over 1,600 points (~4%)
• S&P 500: Declined by approximately 5%
• Nasdaq: Dropped more than 1,000 points, ending roughly 6% lower
• Total Market Value Lost: Approximately $3.1 trillion

Additionally, both oil and gold prices declined, while investors sought safety in U.S. Treasuries. This downturn positions the financial markets for a challenging period, with ongoing tariffs and international responses testing investor confidence.

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2. Market Turmoil and Investor Reactions

Hannah Aaron Lang, WSJ Markets Reporter, provides an in-depth analysis of the day's events:

"It's fair to say that today was kind of a bloodbath for markets. We saw the NASDAQ notch its largest one-day point decline on record. [...] Professional investors and businesses are scrambling to adjust their plans in response to what one analyst called the worst of the worst-case scenario regarding the President's tariff plans."
— Hannah Aaron Lang, [02:06]

Key Points:

• Stock Futures: Began declining the night before after a speech by President Trump.
• Broader Impact: The turmoil affected virtually every market sector, signaling widespread uncertainty.
• Future Outlook: Hannah anticipates continued volatility as investors reassess their strategies in light of the administration's tariff plans.

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3. Sector-Specific Impacts

a. Technology Sector

The episode delves into the significant losses experienced by major tech companies:

"The Magnificent Seven large-cap tech stocks [...] suffered some really big losses today. Amazon and Apple were some of the biggest losers, around 8 or 9% losses today."
— Hannah Aaron Lang, [02:52]

• Magnificent Seven ETF: Dropped by approximately 7%
• Notable Losers: Amazon, Apple, and other leading tech firms faced double-digit declines.

b. Consumer Staples and Safe Havens

Stephen Wilmot, WSJ Reporter, discusses the rotation into consumer staple stocks amid the sell-off:

"These are often considered consumer staples. They sell goods that people tend to buy, whether in good times or in bad."
— Stephen Wilmot, [05:45]

Examples of Resilient Stocks:

• Diageo and Campari: Benefited from tariff-related relief concerning Mexican tequila imports.
• Pharmaceuticals: Maintained stability as they are traditional safe-haven investments.
• Philip Morris, Nestlé, InBev: These companies saw their share prices rise due to their status as consumer staples.

c. Financials and Property Stocks

As the market downturn persisted, traditionally stable sectors like financials and property stocks also experienced declines:

"The stock market pain has spread essentially, and the recession trade has built so that everything that is generally macroeconomically sensitive has started to sell off."
— Stephen Wilmot, [06:41]

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4. Currency Dynamics: The Falling U.S. Dollar

A surprising development was the significant drop in the U.S. dollar's value, contrary to expectations that tariffs would bolster it.

"Trump's tariffs were supposed to boost the dollar. Why is it falling instead?"
— Alex Osola, [08:57]

Insights from John Cendreou, WSJ Heard on the Street Columnist:

"One reason could be that the dollar was very expensive already, but that still doesn't explain why the drop was so obvious. [...] Investors are realizing today that the growth prospects of the US are deteriorating."
— John Cendreou, [09:21]

Key Takeaways:

• Dollar Decline: The dollar dropped over 2% against major currencies like the euro, yen, and Swiss franc.
• Underlying Cause: Concerns over the U.S.'s long-term growth prospects overshadowed the immediate impact of tariffs, leading to diminished investor confidence in holding dollar-denominated assets.

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5. Trade Policies and International Reactions

The episode covers the retaliatory measures taken by Canada in response to President Trump's tariffs:

"Canadian Prime Minister Mark Carney said today that his country would match President Trump's auto tariffs with 25% tariffs of its own."
— Alex Osola, [07:29]

Details:

• Target of Tariffs: U.S. vehicles not compliant with the USMCA trade pact.
• Financial Impact: Potential levy of up to $5.6 billion to support affected workers and companies.
• Economic Outlook: Carney warned that Trump's tariffs could lead to a global economic downturn and increase the risk of a U.S. recession.

Additional Tariff News:

• The U.S. announced a 10% tariff on the Heard and McDonald Islands, an Australian territory uninhabited by humans but home to penguins, highlighting the global and far-reaching nature of the tariff measures.

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6. Political Developments: NSC Staff Firings

In a significant political move, several National Security Council (NSC) staffers were dismissed following allegations from right-wing conspiracy theorist Laura Loomer:

"Several National Security Council staffers were fired this week after right-wing conspiracy theorist Laura Loomer alleged to President Trump that some members of his administration weren't aligned with his priorities."
— Alex Osola, [11:27]

Details:

• Number of Staffers Fired: Four aides overnight and two additional aides on Sunday.
• Official Response: NSC spokesman Brian Hughes declined to comment, and Loomer refused to discuss her meeting with the president.
• Implications: The firings indicate internal strife and the administration's stance on loyalty amidst external pressures.

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7. Conclusion and Future Outlook

The episode concludes with a reflection on the day's events and a cautious outlook for the future:

Hannah Aaron Lang predicts ongoing volatility due to the severe tariff plans and their broad economic impact.

"This is definitely not the end of the effects that we're going to see from this plan and unfortunately not the end of what I expect will be continued volatility for investors as well."
— Hannah Aaron Lang, [03:34]

John Cendreou emphasizes investor skepticism regarding the U.S.'s long-term growth strategy under the current administration:

"Investors don't believe that this will lead to higher productivity growth and they have good reason to not believe it."
— John Cendreou, [10:48]

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Produced by: Anthony Banci and Pierre Bienname
Supervising Producer: Michael Kasmides

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This episode of WSJ What’s News provided a comprehensive overview of the dramatic decline in U.S. stock markets, the multifaceted reasons behind the downturn, sector-specific impacts, unexpected currency movements, retaliatory trade policies, and significant political developments. The discussions highlighted the precarious state of financial markets and the intricate interplay between trade policies and economic confidence.

Transcript

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[Alex Osola]

US stocks plunge, losing more than $3 trillion in market value plus why? Amid a market sell off, investors are turning to consumer staple stocks and what a weaker dollar means for the U.S. s economic future.

[John Cendreou]

What investors are realizing today is that the growth prospects of the U.S. are deteriorating.

[Alex Osola]

It's Thursday, April 3rd. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's News, the top headline stories that move the world today. US Stocks have suffered their biggest single day wipeout in market value since the COVID rout in March 2020. Dozens of household name stocks posted double digit declines, including hp, Nike and Target. The US Dollar sank. Oil and gold both fell and investors dashed for the safety of Treasuries. The decline sets up financial markets for one of their most precarious periods in recent years as the tariffs and the international reaction test the faith investors used to stick with stocks. The Dow fell more than 1600 points, or about 4%. The S&P 500 slid about 5% and the Nasdaq was down more than 1000 points, ending the day roughly 6% lower. All in all, US stocks have lost roughly $3.1 trillion in market value. For more, I'm joined by WSJ markets reporter Hannah Aaron Lang. Well Hannah, what a day it's been for the markets. What happened here today?

[Hannah Aaron Lang]

It's fair to say that today was kind of a bloodbath for markets. We certainly got hints that that was coming. Stock futures started to turn lower last night after President Trump's speech, but this was really quite a dramatic day. So The S&P 500 fall a lot. We saw the NASDAQ notch its largest one day point decline on record. Treasury yields fell, the DO fell. So there was turmoil in almost every corner of the market. And of course, what's driving this is professional investors and businesses just scrambling to adjust their plans and their strategies in response to what one analyst called a worst of the worst case scenario when it comes to the President's tariff plans.

[Alex Osola]

I mean, there's so much that happened and so many things were affected. But I'm curious what stood out to you?

[Hannah Aaron Lang]

This is something we've been monitoring for a while, but it was definitely cast in very stark terms today. The Magnificent seven large cap tech stocks that were on top of the world for a while, they suffered some really big losses today. The round hill Magnificent Seven ETF that tracks all of those as a group, it was down about 7%. Amazon and Apple were some of the biggest losers, around 8 or 9% losses today. But also I was just really surprised by the depth and breadth of these losses. As I mentioned, there wasn't really a part of the market that wasn't touched by this at some point today.

[Alex Osola]

Okay, lots of pain for investors today. Is it over now? What happens next?

[Hannah Aaron Lang]

Today might have been more intense than the days to come. This was the initial reaction, investors grappling with this plan that was much more severe than, than they had anticipated. But what I'm hearing from the sources that I talk to, whether they're professional portfolio managers or just individual investors, is that this volatility these up and down days seem to be something that's going to stick around just because of the potential impact of this plan. So this is definitely not the end of the effects that we're going to see from this plan and unfortunately not the end of what I expect will be continued volatility for investors as well.

[Alex Osola]

That was WSJ reporter Hannah Aaron Lang. Hannah, thank you for being here.

[Hannah Aaron Lang]

Thank you so much for having me.

[Alex Osola]

Amid today's broader sell off, some stocks better than others. I'm joined now by WSJ reporter Stephen Wilmot. Stephen, what kinds of companies saw their.

[Stephen Wilmot]

Stock price rise today in the European trading morning? We got, for example, the drinks makers Diageo and Campari. Their stocks rose because there had been fears that their Mexican tequila imports to the US which account for quite a dominant chunk of the US businesses these days, would be hit by tariffs because the current exemption for USMCA compliant goods, that's goods that comply with the Free Trade Area Rules in North America, that that exemption would end. And so the fact that it wasn't led to a bit of a relief for some sectors. Another one was pharma because pharmaceutical products were exempted. As the trading day has evolved, that's changed a bit because the liquor companies have started to trade down and that's because a consensus is starting to build that actually these tariffs could be recessionary. And obviously that's not good for liquor companies. But pharmaceuticals are a traditional safe haven Trade because people continue to buy drugs even in recessions.

[Alex Osola]

I'm also seeing the share price go up for companies like Philip Morris, Nestle, InBev. What do they have in common?

[Stephen Wilmot]

These are often considered consumer staples. They sell goods that people tend to buy, whether in good times or in bad. Nestle sells pet food formula, coffee, so things that people won't stop buying in a recession. Philip Morris, obviously, cigarettes, a classic recession trade. And Anheuser Busch beer, Budweiser, which is considered a bit more of a staple alcoholic drink than tequila, for example, which goes into high end cocktails that you might consume in bars. So investors rotate into these consumer staple stocks in anticipation of a recession, in anticipation of consumers trading down into cheaper, more basic product categories.

[Alex Osola]

Some of the companies that started the day down quite a bit, including Nike, now they're starting to perhaps not look quite so much like anomalies. Right?

[Stephen Wilmot]

Yes, a sea of red at the moment. It started the day with a slightly more nuanced reaction. I would say Adidas in European trading was one of the big losers early on in the European trading day following night in post market trading in the US and that's obviously because they imported a lot of shoes from Vietnam and Vietnam got hammered with particularly high reciprocal tariff. And Southeast Asia was in general the kind of big loser from the announcements. But then as the day has built, the stock market pain has spread essentially and the recession trade has built so that everything that is generally macroeconomically sensitive has started to sell off. So bank financials, property stocks, things that have nothing to do with tariffs.

[Alex Osola]

That was WSJ reporter Stephen Wilmot. Thank you, Stephen.

[Stephen Wilmot]

Thank you.

[Alex Osola]

Canadian Prime Minister Mark Carney said today that his country would match President Trump's auto tariffs with 25% tariffs of its own. The levy would be on U.S. vehicles that are not compliant with the U.S. mexico, Canada trade pact. He said the counter tariff would apply only to finished vehicles and wouldn't affect vehicle content from Mexico. Carney said the tariff could raise up to the equivalent of about US$5.6 billion, which would be used to help workers and companies affected by the Trump tariffs. The Canadian prime minister also told reporters at a press conference that President Trump's tariff order will rupture the global economy and increase the risk that the US Will fall into a recession. That he said would make it very difficult for Canada to avoid something similar coming up. Trump's tariffs were supposed to boost the dollar. Why is it falling instead? That's after.

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[Alex Osola]

Today'S market sell off was no surprise to analysts, but one thing they hadn't expected, a falling US Dollar. The dollar slipped to its lowest level of the year, sinking more than 2% against the euro, Japanese yen and Swiss franc. I'm joined now by WSJ Heard on the street columnist John Cendreou to discuss. Okay, John, what's going on here? Trump's tariffs were supposed to boost the dollar. Why is it falling?

[John Cendreou]

One reason could be that the dollar was very expensive already, but that still doesn't explain why the drop was so obvious. And also, the dollar has been dropping most of the past month and a half, ever since Trump basically announced those big tariffs on Canada and Mexico. What investors are realizing today is, is that the growth prospects of the US Are deteriorating. And it turns out that even though they might be right, that a tariff does mechanically push up the dollar, actually the growth part of it is far more important.

[Alex Osola]

So why did this catch analysts by surprise?

[John Cendreou]

The vision that the dollar should go up has been around for quite a while. It kind of worked in the first Trump term when he put his first tariffs on China. But this time we knew the tariffs would be larger. Analysts were saying during the campaign, yeah, yeah, the tariffs will be dollar positive. And of course, this policies that are attached to Trump, which are also supposed to be dollar positive, like cutting taxes and maybe interest rates will go up because of Trump. And that also means there's more money to be made in the US and people move more money there. But what they forgot is, yeah, that's fine and sometimes it works. But the long term outlook on whether equity investors will make money here the next 15 years, as they have this past 15 years, rather than investing in other parts of the world, that's actually huge. So that's what the stock market is pricing in today.

[Alex Osola]

So just looking at where the dollar is right now, what does it tell us about the long term prospects for the US Economy?

[John Cendreou]

It's saying that this as a growth strategy is not a good one. This is not a growth strategy. That reminds us of the cases where protectionism has had some success. And when we look at the US Economy, we don't see a coherent way to perhaps achieve the goals that the administration says that they want, such as bringing back manufacturing jobs and increasing productivity growth in what they've announced. So investors don't believe that this will lead to higher productivity growth and they have good reason to not believe it.

[Alex Osola]

That was WSJ Heard on the street columnist John Cendreou. Thank you, John.

[John Cendreou]

Thank you.

[Alex Osola]

In other news, several National Security Council staffers were fired this week after right wing conspiracy theorist Laura Loomer alleged to President Trump that some members of his administration weren't aligned with his priorities. That's according to people familiar with the matter. The people said that four NSC aides were fired overnight and that two other NSC aides were let go on Sunday. The exact reasons for the staffers ouster couldn't immediately be determined. NSC spokesman Brian Hughes declined to comment. In a statement, Loomer declined to discuss her meeting with the president. And finally, President Trump's tariffs are truly global. Towards the bottom of the list of tariffs the White House released yesterday is an entry titled Heard and McDonald Islands, against which the US plans to levy a 10% tariff. Except the Heard and McDonald Islands don't have any people living there. Instead, the remote Australian territory, located about 1,000 miles north of Antarctica, is home to a large colony of penguins. As Australian Prime Minister Anthony Albanese said, nowhere on earth is exempt from this. And that's what's news for this Thursday afternoon. Today's show is produced by Anthony Banci and Pierre Bienname with supervising producer Michael Kasmides. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.