The S&P 500 dropped sharply on Tuesday, closing below 5,000 points for the first time in almost a year after reversing an early morning rally. Investors’ hopes faded for any last-minute delays or concessions on tariffs before a midnight deadline.
The benchmark index, which fell 1.6% on Tuesday, has lost $5.8 trillion in market value since President Donald Trump announced major global tariffs against U.S. trading partners late last Wednesday. This represented more than a 12% decline over four days, making it the biggest four-day percentage drop since the pandemic, according to LSEG data.
The S&P had risen more than 4% earlier on Tuesday as investors hoped Trump might soften his stance or postpone the April 9 tariff deadline.
But White House press secretary Karoline Leavitt said Tuesday afternoon that Trump expects tariffs will go into effect despite nearly 70 countries reaching out to begin negotiations to reduce the impact of U.S. trade policies.
The White House said Tuesday afternoon that it expects 104% tariffs on China to take effect on April 9.
This came after China had stated earlier that it would never accept the “blackmail nature” of Trump’s threat to increase tariffs on Chinese imports to more than 100%.
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Quarterly earnings season begins later this week, with JPMorgan, Morgan Stanley, and Wells Fargo set to report on Friday.
The S&P 500 moved closer to entering bear market territory, finishing almost 19% below its record close on Feb. 19. A bear market is officially declared at 20% below.
The benchmark lost 79.48 points, or 1.57%, to close at 4,982.77 on Tuesday. The last time it closed below 5,000 was April 19 last year.
The Dow Jones Industrial fell 320.01 points, or 0.84%, to close at 37,645.59, while the Nasdaq Composite lost 335.35 points, or 2.15%, to end at 15,267.91.
After falling as low as 36.48 points earlier in the day, the CBOE Volatility Index – known as Wall Street’s ‘fear gauge’ – increased again to close at 52.33 points, its highest closing level since March 2020, marking its fourth straight day of increases.
