U.S. stock index futures tumbled on Monday, deepening the ongoing market selloff, after President Donald Trump reaffirmed his commitment to sweeping trade tariffs. The move has intensified recession concerns and heightened investor anxiety.
As of 07:20 ET (11:20 GMT), Dow Jones Futures had dropped 675 points (1.8%), S&P 500 Futures declined 93 points (1.8%), and Nasdaq 100 Futures fell 380 points (2.2%). Investors fear that Wall Street could be heading for its worst one-day drop since Black Monday in 1987, when global markets collapsed due to extreme risk aversion.
The S&P 500 has now lost over 10% in two sessions, erasing nearly $5 trillion in market value—marking its steepest two-day decline since March 2020 at the onset of the COVID-19 pandemic. The index is now edging closer to bear market territory.
Trump Tariffs Escalate Global Trade War
President Trump doubled down on his stance Sunday, stating that tariffs were the only way to correct trade imbalances with China and the European Union. He reaffirmed that the duties would remain in place and warned investors to brace for the economic impact. He also ruled out negotiations with China until the U.S. trade deficit is addressed.
Last week, the administration implemented a 10% universal import tariff, which took effect on April 5. Higher tariffs on key trade partners—including China, Vietnam, Japan, and the European Union—are scheduled for April 9.
In response, China has retaliated with 34% tariffs on U.S. goods, escalating the trade standoff. The European Union is also exploring a unified response, potentially setting the stage for additional retaliatory measures.
The growing trade tensions have fueled fears of a global trade war, with severe implications for international commerce and economic stability.
Meanwhile, recession risks are climbing. Goldman Sachs raised its 2025 U.S. recession probability to 45% (up from 35% last week), while JPMorgan increased its global recession forecast for this year to 60%, up from 40%.
Wall Street’s “Fear Gauge” Hits Extreme Levels
Investor anxiety is surging, as reflected in the CBOE Volatility Index (VIX)—Wall Street’s leading fear gauge—which spiked above 60 intraday, its highest level since August last year.
The VIX opened sharply higher Monday, with its futures curve inverting, signaling extreme short-term stress and a surge in hedging demand. The spread between front-month and eight-month contracts has widened to levels not seen since the height of the COVID-19 market turmoil in 2020, according to Bloomberg.
Markets are now fully pricing in five Federal Reserve rate cuts through 2025, as investors brace for economic turbulence. Treasury yields have plunged, reflecting rising demand for safe-haven assets.
Tech Giants Lead the Decline
Stocks across sectors faced heavy losses in premarket trading, with megacap tech stocks bearing the brunt:
- Apple (AAPL), Nvidia (NVDA), and Amazon (AMZN) all saw sharp declines.
- Tesla (TSLA) also traded significantly lower.
- Caterpillar (CAT), a key player in global construction equipment, slumped as trade tensions threaten industrial demand.
Crude Oil Plunges to Four-Year Lows
Oil prices extended last week’s steep losses, plunging to four-year lows amid escalating trade tensions and mounting global recession fears.
Both Brent crude and WTI crude fell more than 10% last week, hitting their lowest levels since April 2021 as China—the world’s largest crude importer—escalated tariffs on U.S. goods. The European Union is expected to follow suit this week, adding further pressure on global demand.
Additionally, market sentiment was further dented by last week’s announcement that several OPEC+ members—led by Russia and Saudi Arabia—plan to accelerate production increases, deepening the supply glut.d Saudi Arabia—plan to accelerate production increases, deepening the supply glut.
