US stocks close sharply lower, wiping away some of historic rally a day earlier

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The U.S. stock market experienced a sharp decline on Thursday, erasing some of the gains from the previous day’s rally as investors reacted to President Donald Trump’s decision to suspend some tariffs while escalating the trade war with China.

Shortly after the market opened, the White House announced that U.S. tariffs on China would stand at 145%, higher than the previously reported 125%. This news caused a further drop in share prices, with the Dow Jones Industrial Average falling by 1,014 points, or 2.5%, at the close of the market. The S&P 500 and Nasdaq also saw significant declines of 3.4% and 4.3%, respectively.

Several major companies felt the impact of the market downturn. Footwear giant Nike saw its shares plummet by 8%, while electric carmaker Tesla, led by Trump-adviser Elon Musk, fell by 7%. Chipmaker Nvidia also experienced a 5% drop in its share price.

However, some companies managed to extend their gains from the previous day. Telecoms AT&T and Verizon both saw an increase of more than 0.75% in their share prices.

The trade tensions between the U.S. and China continued to escalate, with Beijing announcing restrictions on imports of Hollywood films in response to Trump’s decision to raise cumulative tariffs on Chinese goods to 145%. Chinese Foreign Ministry spokesperson Lin Jian criticized the U.S. for using tariffs as a weapon for selfish gains.

The market losses on Thursday reversed some of the gains from the historic rally on Wednesday, which was triggered by Trump’s tariff announcement. The Nasdaq had surged by 12.1% on Wednesday, its largest single-day gain since 2021, while the Dow had jumped by 7.8%, marking its biggest one-day increase in five years.

Before the market downturn in the U.S., Asian and European markets had rallied. Key Asian indices, including Japan’s Nikkei 225 and South Korea’s Kospi, recorded significant recoveries. In Europe, the STOXX 600 index jumped by more than 7%, with major European markets like the FTSE 100, CAC 40, DAX, FTSE MIB, and IBEX all posting gains.

Overall, the global markets were volatile as investors reacted to the escalating trade tensions between the U.S. and China. The uncertainty surrounding the future of trade relations between the two economic superpowers continued to weigh on investor sentiment.