Investors grappled with a volatile session as the US stock market, or Wall Street, briefly hit its deepest intraday decline since the Covid-19 pandemic, only to pare some losses as dip buyers emerged.

The S&P 500 index plunged 3.5%, after dropping 6.3%, its biggest intraday drop since March 2020. The Nasdaq 100 plunged 4.2%. The Dow Jones Industrial Average fell 2.5%, and the Russell 2000 Index slumped 4.3%.

Today's move was a sharp reversal from the previous session, when U.S. stocks posted one of their biggest daily gains in the post-World War II era after the White House delayed record tariffs on U.S. trading partners.

However, concerns about the economic damage from President Donald Trump's global trade war have resurfaced, overshadowing data showing a slowdown in domestic inflation.

Trump said US tariffs could cause "transition problems," but expressed confidence in his plan. The White House also clarified that levies on China would increase to 145%.

"The market is a bit desperate to find some kind of temporary balance, and trying to take stock of everything that's happened over the last few days," said Irene Tunkel, chief U.S. equity strategist at BCA Research Inc.

Nearly 450 companies in the S&P 500 closed lower. The index rebounded from oversold conditions but remained below its key moving averages.

The consumer staples sector was the only gainer on the benchmark stock index as investors sought a safe haven in the market.

"It's your hedge against a downturn because it's very difficult to cut back on some of the necessities, so their revenue streams are very stable through the ups and downs," Tunkel said of the sector, which includes discount retailers and snack makers.

Morgan Stanley warned that foreign outflows pose a "significant left-tail risk" to US equities. "Selling a basket of foreign-held stocks is an effective hedge against this risk," Chris Metli, the bank's head of quantitative and derivatives strategy, wrote in a note to clients on Thursday (April 10, 2025) local time.

Meanwhile, retail traders continued their buying spree today, after spending $11 billion in cash equities in the week ending Wednesday. As of 2:30 p.m. ET, they had purchased $3.4 billion in U.S. stocks, above the one-month average for that time.

They snapped up some long-time favorites: Tesla Inc, Nvidia Corp, and Palantir Technologies Inc, according to data from Emma Wu, a global quantitative and derivatives strategist at JPMorgan Chase & Co.

Options volatility eased as the S&P 500 recovered from its low of the day. The VIX index rose 7.5 points to 41, after paring gains after reaching 55 in early trading. This figure remains high compared to last year's average of 17.4.

US government data showed that core consumer prices (CPI) rose 0.1% in March from the previous month—below the 0.3% forecast. The overall CPI fell 0.1% from the previous month, the first decline in nearly five years.

"This inflation number doesn't seem to provide much relief to the market. It's probably not weak enough to make people think the Federal Reserve is going to be aggressive," said Matt Maley, chief market strategist at Miller Tabak + Co.

If history is any indication, in the 16 times the benchmark U.S. stock index fell 15% or more in a year, as it did before the rally, the S&P 500 only recovered three times and ended the 12-month period in the red, according to data compiled by Ryan Detrick of the Carson Group.

Among stock movers, US Steel shares fell after Trump said he did not want a Japanese company to buy the steelmaker. Constellation Brands Inc. fell after issuing downbeat guidance for the year due to new US tariffs and weak demand.

Automaker shares plummeted, with US-listed Stellantis NV shares dropping 11.96%. Semiconductor stocks also sold off, with Nvidia Corp. dropping 5.91% and Intel Corp. dropping 7.66%. Shares of major US banks such as JPMorgan Chase & Co., Goldman Sachs Group Inc., and Bank of America Corp. fell 5% or more.

Source: Bloomberg

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