A trader works on the floor of the New York Stock Exchange on April 3, 2025. Brendan McDermid | Reuters

U.S. stock futures took a significant hit Thursday night following President Donald Trump’s announcement of a new tariff plan, which triggered the largest single-day drop in U.S. equities since 2020.

Futures linked to the Dow Jones Industrial Average fell by 91 points, or 0.2%. This decline followed a staggering plunge of more than 1,600 points in the previous trading session. Similarly, S&P 500 futures also decreased by 0.2%, and Nasdaq 100 futures inched down by 0.1%.

All three major U.S. indexes faced significant losses on Thursday, marking one of the worst days for the stock market since 2020. Specifically, the Dow and S&P 500 experienced declines of approximately 4% and 4.8%, respectively. The tech-heavy Nasdaq Composite witnessed a more severe dip, dropping nearly 6% into a correction phase, as it fell more than 10% from its all-time high in February.

The Russell 2000 index, which focuses on small-cap stocks, saw a dramatic decline of over 6%, officially entering bear market territory as it fell 20% from its last peak. This downturn highlights a worrying trend among stocks sensitive to economic shifts.

The sell-off particularly affected major technology companies, with CNBC’s Magnificent Seven index plummeting more than 6%. This drop cost the stocks in this prominent index over $1 trillion in market value, raising concerns among investors.

President Trump’s announcement of a 10% baseline tariff on imported goods, effective April 5, sparked declines not just in U.S. markets but also across global trading platforms. Investors are now speculating whether nations will negotiate to mitigate these tariff rates.

Michael Arone, chief investment strategist at State Street Global Advisors, commented, ‘The Trump administration may be playing a game of chicken with trading partners, but market participants aren’t willing to wait around for the results. Investors are selling first and asking questions later.’

As the market grapples with these shifts, investors will be closely watching the upcoming jobs report for March. Economists expect nonfarm payrolls to increase by 140,000 jobs, while the unemployment rate is anticipated to remain steady at 4.1%.

Following the tariff announcement, Bruce Kasman, chief economist at JPMorgan, raised the likelihood of a global recession to 60%. He stated, ‘We view the full implementation of announced policies as a substantial macroeconomic shock not currently incorporated in our forecasts.’ Kasman indicated that sustained policies might drive both the U.S. and global economies toward recession.

The ongoing market volatility presents a challenging landscape for investors. As the implications of President Trump’s tariff strategy unfold, the economic future remains uncertain. How will markets respond in the coming weeks?