CNN —
US stocks were set to plunge Friday after China retaliated against the United States for President Donald Trump’s tariffs.
Dow futures fell 1,100 points, or 3%. The broader S&P 500 was set to open 3.1% lower and the tech-heavy Nasdaq Composite was on pace to start the day 3.2% lower.
Investors ditched risky stocks and poured money into traditional safe havens, including government bonds and gold.
The 10-year Treasury yield, which briefly fell below 4% Thursday for the first time since October, fell firmly below 4% Friday as investors bought bonds to insulate themselves from a potential economic downturn. Bond prices and yields trade in opposite directions.
Gold prices surged above $3,130 a troy ounce, setting another record. But investors ditched other commodities, including oil, out of fear that the trade war could send the global economy into a recession. US oil, which plunged nearly 7% Thursday, tumbled another 6.1% below $63 a barrel. Brent oil futures, the global benchmark, fell 5.7%.
China announced sweeping 34% tariffs on all US goods starting April 10, a major escalation of a trade war that has been raging for years between the world’s two largest economies. But the tit-for-tat tariff escalation kicked into high gear after Trump took office for the second time in January.
Trump in February placed an additional 10% tariff on all Chinese goods imported to the US and doubled that rate to 20% in March. On Wednesday, Trump announced that tariffs on China would rise to 54%. That’s on top of existing import taxes, which he and former President Joe Biden already had in place on the country. So the effective tariff rate America imposes on Chinese goods will be around 64% starting April 9.
Investors had already been fearful that a dramatic escalation of the trade war could plunge the US and global economies into a recession. JPMorgan said Thursday that America’s economy and the broader world economy both had a 60% chance of sinking into a recession this year.
Markets have been on edge as a result: Stocks tumbled all over the world. European and UK stocks were down more than 3% Friday, on pace for their worst performance in years.
On Thursday, the Dow fell more than 1,600 points, or nearly 4%. The S&P 500 fell nearly 5% and the Nasdaq plunged nearly 6%. Each of the three major US indexes recorded its worst performance in about five years, since the pandemic.
Thursday’s plunge erased $2.5 trillion in market value from the US stock market.
This is a developing story and will be updated.
