[New York Stock Market] 'KRW 4500 trillion market cap evaporates' US stock market convulses over reciprocal tariffs... Dollar and oil prices also plunge (Comprehensive)

Trump Imposes '10%+α' Mutual Tariffs Worldwide
Fears of Recession and Trade War Trigger Massive Sell-Off
S&P Down 4.84%, Dow Down 3.98%... Largest Drop in 5 Years

U.S. President Donald Trump's mutual tariff bombardment struck the New York stock market on the 3rd (local time). All three major indices recorded their largest drop in five years, with a staggering $3.1 trillion (approximately 4,500 trillion KRW) in market capitalization evaporating in a single day on the U.S. stock market. As fears that the U.S. economy could fall into a recession due to tariff rates exceeding Wall Street expectations engulfed the market, a flood of sell-off volume poured in. The dollar value and international oil prices plunged sharply, while bond prices rose due to safe-haven demand, pushing the 10-year Treasury yield down to around 4%.

S&P 500 down 4.8%, Nasdaq down 6%... Largest drop in 5 years amid flood of sell-off volume

AFP Yonhap News

On this day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average (Dow) closed at 40,545.93, down 1,679.39 points (3.98%) from the previous trading day. This was the largest drop since June 2020. The large-cap-focused S&P 500 index plunged 274.45 points (4.84%) to 5,396.52, and the tech-heavy Nasdaq index slid 1,050.44 points (5.97%) to 16,550.6. Both indices recorded their largest drops since June 2020 and March 2020 respectively, marking the 'worst day' since the COVID-19 pandemic.

President Trump announced mutual tariffs of at least 10% on all trading partners worldwide the day before. After imposing a basic 10% tariff on all countries, additional tariffs of '10% + α' are applied to so-called 'worst offenders' deemed to have high trade barriers, including tariff and non-tariff barriers. South Korea faces a 25% tariff, China and the European Union (EU) face tariffs of 34% and 20%, respectively.

The aggressive tariff rates, exceeding initial expectations, heightened concerns about a U.S. economic recession and a global trade war, prompting investors to rush to sell stocks. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's fear gauge, surged 39.6% from the previous day to 30.02, the highest level since August last year.

Wall Street warns of recession triggered by tariffs... Trump undeterred, says "Stock market will prosper"

Warnings are pouring in on Wall Street that the mutual tariff measures could make a recession a reality. Investment bank Barclays forecast that the U.S. GDP growth rate will contract by -0.1% this year due to the impact of mutual tariffs. Inflation is expected to rise to 3.7%, well above the monetary authorities' target of 2%. UBS predicted that the U.S. economy will fall into a technical recession with two consecutive quarters of negative growth. Michael Feroli, JP Morgan's chief U.S. economist, also diagnosed that inflation will rise by an additional 1.5 percentage points this year due to mutual tariffs, suppressing consumption and bringing the U.S. economy dangerously close to recession.

Mary Ann Bartels, senior investment strategist at Sanctuary Wealth, said the mutual tariff level announced the day before was "the worst-case scenario and was not priced into the market," adding that "a risk-averse reaction is emerging in the market."

Despite the New York stock market 'seizure,' President Trump showed no intention of backing down from his tariff offensive, saying the market will prosper. He told reporters at the White House in the afternoon, "The market, stocks, and the country will prosper," adding, "The rest of the world wants to know if there is a way to do business with us." Earlier that morning, he posted on his social media platform Truth Social, which he created, "The surgery is over," saying, "The patient survived and is healing," expressing his determination to lead the U.S. (the patient) to economic recovery and reconstruction through mutual tariffs (surgery).

UPI Yonhap News

Nike down 14%, Apple down 9% in 'massive sell-off'... Dollar and oil prices fall, bond prices surge

Most stocks fell. Among individual stocks, Nike, which relies heavily on overseas production, plunged 14.4%. Apple, which produces the most iPhones in China, plummeted 9.25%. Discount retailer Five Below slid 27.8%, and Dollar Tree dropped 13.3%. Apparel company Gap fell by as much as 20.3%. Due to risk aversion, tech stocks also joined the plunge, with Nvidia and U.S. electric vehicle maker Tesla falling 7.8% and 5.5%, respectively.

The dollar value and international oil prices declined amid concerns about a U.S. economic recession. The Dollar Index, which measures the dollar's value against the currencies of six major countries, fell 1.76% from the previous day to 101.67. International oil prices plunged more than 6%. West Texas Intermediate (WTI) crude oil closed at $66.95 per barrel, down $4.76 (6.64%) from the previous day, while Brent crude, the global oil price benchmark, closed at $70.14 per barrel, down $4.81 (6.42%).

Demand for safe-haven bonds surged, causing bond prices to rise and yields to fall. The 10-year U.S. Treasury yield, a global bond yield benchmark, dropped 15 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.03%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, plunged 21 basis points to 3.69%.