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• Stocks fell sharply due to rising US-China tensions, with major indexes losing 5% to 7%. 
• Technology companies like Tesla, Amazon, and Apple saw significant stock declines. 
• Analysts warn of continued market volatility and uncertainty in US trade policy. 

Stocks fell sharply Thursday (local time) as attention shifted to rising tensions between the United States and China. 

The S&P 500 fell nearly 6% by early afternoon (local time) and tech-heavy Nasdaq composite index lost 7%, while the more narrow Dow Jones Industrial Average dropped 5%. If the trend holds up for the rest of the day, it would unwind much of Wednesday’s gains, in which the S&P 500 rose almost 10%. All three major indexes are down significantly from where they started the year. 

Analysts said the US-China situation could still bring more volatility to markets, as the 90-day tariff reprieve announced by President Donald Trump on Wednesday excludes China. Trump instead announced another increase in tariffs on Chinese goods, further inflaming a fast-moving trade war between the world’s two biggest economies. 

Several prominent technology companies with extensive business related to China saw their stocks pummelled. Tesla tumbled more than 10%, while Amazon and Apple lost 7%. Chipmaker Nvidia lost more than 8%. 

Meanwhile, US tariff policies for the rest of the world remain uncertain, as the United States has just started trade negotiations with dozens of countries in the ensuing months. 

“Volatility is the one thing we can all count on, and we’re seeing a good deal more of it today as markets settle in and really find the right price for what this all means,” said Michael Farr of the DC-based investment firm Farr, Miller and Washington. 

The Chinese Government sharply criticised Trump’s decision to increase tariffs on China to a minimum of 125% and punched back with a limit on US films allowed into the Chinese market. 

“The US is openly defying global norms and going against the entire world,” said Lin Jian, a Chinese Foreign Ministry spokesperson. “China does not want a fight, but it is not afraid of one either.” 

Relief in other countries after tariff delay 

Other governments across Asia expressed relief at the tariff delay for their countries, and Asian markets posted significant gains overnight. Indexes tied to Japan, South Korea and Taiwan jumped between 6 and 10%. Hong Kong’s Hang Seng Index, which lists many companies from the Chinese mainland, gained a smaller 2%. 

For the European Union, Wednesday’s announcement amounted to a tenuous moderation of trade tensions. The EU announced a corresponding 90-day pause of its own retaliatory tariffs before US markets opened on Thursday. European markets rebounded, with stock indexes tied to Britain, France and Germany climbing between 4 and 6%. The Pan-European STOXX 600 rose 5%. 

Analysts worry that the continued shifts are leading many investors to leave the market until long-term US trade policy becomes clear. 

The repeated market declines have led to a cash crunch for some large investors that forced them to unload certain assets, said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. 

Trump’s Wednesday tariff delay, for example, was preceded by a sell-off in US Treasury bonds, raising fears about whether investors are beginning to question US debt as a safe haven. 

US Steel fell almost 7% by 11am Eastern time, a day after Trump said he doesn’t want to see the company in the hands of a foreign company. The steel company has been seeking to merge with Japanese conglomerate Nippon. 

Wedbush senior analyst Dan Ives said in a research note Thursday that the “economic twilight zone” that has followed last week’s tariffs announcement has created enough uncertainty in the market to affect corporate spending. 

“This has created real damage to the corporate spending mentality,” Ives wrote in lowering his price target for Microsoft. 

Any company with ties to China has very little certainty about what happens next, analysts, and their stock prices are taking a beating as a result. And the White House’s repeated reversals on trade have left Wall Street wary. 

“The 90-day suspension gives everyone a sigh of relief, as if they’ve dodged a bullet for now … but the President may have another bullet in the gun,” said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. 

Katrina Northrop is a China correspondent for The Washington Post. Previously, she covered China’s global impact on business and technology for The Wire China. Aaron Gregg is a business reporter for the Washington Post. Andrew Jeong is a reporter for The Washington Post in its Seoul hub. Leo Sands is a breaking-news reporter and editor in The Washington Post’s London Hub, covering news as it unfolds around the world.