The New York stock market tumbled on Thursday as investors succumbed to panic.
The S&P 500, which best reflects market conditions, entered correction territory, while the tech-heavy Nasdaq approached the threshold of a bear market.
The Dow Jones Industrial Average, comprising 30 blue-chip stocks, also inched closer to correction territory.
The CBOE Volatility Index (VIX), often referred to as Wall Street’s Fear Index, surged by 40%, breaking above the 30-point mark.
Apple recorded its steepest drop in five years amid predictions that iPhone prices could skyrocket to $2,300.
Both the S&P 500 and Nasdaq experienced their largest declines in five years.
Panic Selling
The New York stock market, which had closed higher the previous day on hopes that U.S. President Donald Trump’s tariffs would be adjusted to a reasonable level, plunged into panic the following day.
Trump’s announcement of reciprocal tariffs after the market closed aligned with the worst-case scenario.
Fears of economic collapse in the U.S. and globally due to high tariffs and retaliatory measures from trading partners triggered a wave of panic selling.
The Dow plummeted 1,679.39 points (3.98%) to close at 40,545.93.
The S&P 500 nosedived 274.45 points (4.84%) to 5,396.52, while the Nasdaq plunged 1,050.44 points (5.97%) to 16,550.61.
The Dow is now down 9.93% from its previous peak, nearly entering correction territory. The S&P 500 has fallen 12.2%, re-entering correction territory, while the Nasdaq has plummeted 18% from its peak, signaling a potential bear market.
The Russell 2000, representing small-cap stocks, has already entered bear market territory.
It closed down 134.82 points (6.59%) at 1,910.55, marking a 22% drop from its all-time high of 2,442.74 recorded on November 8, 2021.
A market is considered in correction territory when it has fallen more than 10% from its peak and in a bear market when it has fallen more than 20%.
The VIX surged by 40%, surpassing the 30-point mark with a rise of 8.51 points (39.56%) to 30.02.
On this day, 400 of the 500 companies in the S&P 500 saw declines, wiping out $2.5 trillion in market capitalization.
Apple Hits Five-Year Low
Apple’s stock plummeted 9.3%, marking its largest single-day drop since March 2020.
Apple’s shares plunged $20.70 (9.25%) to $203.19, contributing to a 19% decline for the year with a market capitalization loss of over $300 billion.
Concerns about potential price hikes for iPhones, AirPods, and Mac computers due to Trump’s tariffs fueled the sell-off.
Despite Apple’s efforts to diversify production bases – moving iPhone manufacturing to India, AirPods to Vietnam, and Mac computers to Malaysia – the company couldn’t escape the impact of Trump’s tariffs.
India faces a 26% tariff, Vietnam 46%, and Malaysia 24%.
Moreover, Apple continues to produce many of its products in China and relies on Japan, South Korea, and Taiwan for its components.
Japan faces a 24% tariff, South Korea 25%, and Taiwan 32%.
Morgan Stanley analyst Erik Woodring stated that there is no way for Apple’s supply chain to escape Trump’s tariffs.
Woodring warned that Apple may have to raise U.S. prices by 17-18%, as the worst-case scenario is becoming a reality.
Rosenblatt Securities took a more pessimistic view, forecasting a potential 43% price hike for the base iPhone 16 model, from $799 to $1,142. The high-end iPhone 16 Pro Max could surge from $1,599 to $2,300.
Nvidia, Amazon, and Meta Plummet
Other M7 tech stocks also suffered significant losses.
Microsoft (MS) fell $9.03 (2.36%) to $373.11, while Alphabet dropped $6.23 (3.92%) to $152.63.
These declines were relatively modest compared to others. The rest of the M7 Big Tech, including Apple which fell over 9%, saw declines of around 8%.
Nvidia plunged $8.62 (7.81%) to $101.80, and Amazon tumbled $17.60 (8.98%) to $178.41.
Meta Platforms nosedived $52.31 (8.96%) to $531.62, while Tesla dropped $15.48 (5.47%) to $267.28.
Banks and Semiconductors Take a Hit
Banks also suffered steep losses.
Fears that Trump’s reciprocal tariffs and retaliatory measures from other countries could push the U.S. and global economies into recession weighed heavily on the sector.
JP Morgan Chase, the largest U.S. bank, fell by $17.13 (6.97%) to $228.69, while Wells Fargo, the largest bank in the West U.S., dropped $6.59 (9.12%) to $65.67.
Bank of America (BofA) recorded double-digit losses, plummeting $4.63 (11.06%) to $37.22.
Despite the White House’s assurance that semiconductor tariffs are not yet in effect, semiconductor stocks also tumbled.
Nvidia fell 7.8%, AMD dropped $9.16 (8.90%) to $93.80, and Qualcomm Incorporated slid $14.66 (9.51%) to $139.42.
