This week serves as a good reminder to market participants that investing is a marathon and not a sprint — and that the path of the race has always been up and to the right.
That said, today's trajectory was straight down, with all three main indexes suffering notable losses and one sinking into bear-market territory.
The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite opened sharply lower for a second-straight day after China matched the Trump administration's 34% retaliatory tariff on imports with one of its own.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Beijing also added 11 companies to its "unreliable entity list," including Insitu, a drone maker owned by Boeing (BA). BA stock dropped 9.5% in reaction, making it the worst Dow Jones stock today.
The main indexes came off their early lows ahead of a late-morning appearance from Federal Reserve Chair Jerome Powell.
But the selling quickly picked up after Powell said that President Donald Trump's tariff policy is "significantly larger than expected" and will have a bigger impact on the economy and inflation than initially anticipated.
Still, Powell was quick to note that all data he's seeing, while backward-looking, indicates the economy remains resilient and that the Fed is well-positioned to address whatever is to come.
The Nasdaq enters a new bear market
At the close, the blue chip Dow was down 5.5% to 38,314 — falling into correction territory, which is defined as a 10% drop from the most recent high. The broader S&P 500 extended its correction, finishing 6.0% lower at 5,074.
The tech-heavy Nasdaq plummeted 5.8% to 15,587 – entering a new bear market, which is a 20% drop from its most recent high. (The small-cap Russell 2000 fell into bear-market territory on Thursday.)
Just how bad is the stock market sell-off?
The rout in U.S. stocks that occurred over Thursday and Friday erased $6.4 trillion in market value — the biggest ever two-day drop, according to Dow Jones Market Data.
Also troubling: The U.S. market has now wiped out $10 trillion in value since Inauguration Day.
This likely marks the end of the bull market, says Emily Bowersock Hill, CEO and founding partner at Bowersock Capital Partners, "and it was destroyed by ideologues and self-inflicted wounds."
The panic selling is happening because "the Trump administration is trying to sell the trade war to America and the market isn't buying it," says Jay Woods, chief global strategist at Freedom Capital Markets.
"People are sick of this uncertainty rhetoric; they don't see how tariffs will do anything but potentially throw the U.S. into a recession and are now rushing to yank their money out of the markets," he adds.
March jobs growth comes in strong
As Powell noted, data continue to show the economy remains resilient. This morning's release of the March jobs report, for example, came in much higher than expected.
According to the Bureau of Labor Statistics, nonfarm payrolls rose by 228,000 in March. This was higher than both the upwardly revised February figure of 117,000 new jobs, as well as the 140,000 economists expected. January jobs growth was revised down by 14,000.
The unemployment rate, which is calculated from a separate survey, ticked higher to 4.2% from 4.1% in February.
"On the surface, this appears to be a bullish number, but it is important to understand that this is backward-looking data," says Larry Tentarelli, chief technical strategist for Blue Chip Daily Trend Report.
Tentarelli, says that markets are much more concerned with future data, and his concern is that "higher-than-expected tariffs are going to lead to a major slowdown in hiring and the labor market."
As for what investors should do, the strategist recommends maintaining a defensive portfolio position with U.S. Treasury bonds and gold and keeping well-above-average cash levels.
Earnings season is on deck
The immediate fear for investors going into the weekend is that the trade war escalates, Freedom Capital's Woods says.
In the intermediate term, Wall Street will be keeping a close eye on corporate earnings and guidance.
First-quarter earnings season unofficially gets underway late next week, with several of the country's biggest banks set to report.
Woods believes earnings results and guidance "will be that much tougher" for U.S. companies, considering they "are still trying to navigate the uncertainty with the tariffs and can’t adjust and/or guide given the current environment."
Check out the Kiplinger earnings calendar to see which companies will be reporting and when.
Related content
- Wall Street Is Worried About Apple Stock. Should You Be Too?
- The 25 Best No-Load Mutual Funds You Can Buy
- How to Survive Market Mayhem
-
The Shutdown Standoff Is Heading for Its Next Big TestA key mid-October deadline could intensify the shutdown fight in Washington, and the fallout could soon hit workers and your wallet.
-
Should You Buy Gold as It Tops $4,000? Here's What the Experts SayRate cuts, a weak dollar and macro uncertainty have helped create a "perfect storm" for gold this year. Should investors add exposure or is it too late to buy?
-
Should You Buy Gold as It Tops $4,000? Here's What the Experts Say
Rate cuts, a weak dollar and macro uncertainty have helped create a "perfect storm" for gold this year. Should investors add exposure or is it too late to buy?
-
Preferred Bank Stocks: The Investment Retirees (and Others) May Be Missing Out OnMost large banks issue preferred stocks that pay out fixed dividends, often with higher yields than bonds. Should you make room for them in your portfolio?
-
Don't Let Your Equity Compensation Trip You Up: A Financial Expert's GuideStock options, RSUs and other executive perks can come with some serious strings attached. To avoid a nasty tax surprise, you need a plan.
-
Rally Fades on Mixed AI Revolution News: Stock Market TodayAll three main U.S. equity indexes opened higher but closed lower as a seven-session winning streak for the S&P 500 came to an end.
-
The Spendthrift Trap: Here's One Way to Protect Your Legacy From an Irresponsible HeirA spendthrift clause in an estate plan can protect an inheritance from a financially irresponsible child's debts and poor decisions.
-
Adapting to AI's Evolving Landscape: A Survival Guide for BusinessesLike it or not, AI is here to stay, and opting out could be disastrous for your organization. Instead, focus on what you can control and be flexible, as AI is still evolving.
-
S&P, Nasdaq Hit New Highs: Stock Market TodayA late-day rally wasn't enough to lift the Dow into the green as its six-session winning streak came to an end.
-
AMD Stock Surges on OpenAI DealAdvanced Micro Devices could see tens of billions of dollars in new revenue from the ChatGPT maker as the AI infrastructure buildout accelerates.
