WSJ What’s News - U.S. Stocks Fall, Wiping Out More Than $3 Trillion in Market Value

Episode Date: April 3, 2025

P.M. Edition for April 3. U.S. markets experience their steepest declines since 2020, as investors grappled with the impact of President Trump’s new tariff plan. WSJ reporter Hannah Erin Lang joins to discuss. Plus, amid a broader selloff, investors turn to consumer staple stocks. We hear from Journal reporter Stephen Wilmot about which kinds of stocks have emerged as winners. And the U.S. dollar fell today, catching analysts by surprise. Heard on the Street columnist Jon Sindreu tells us what that means for the U.S.’s economic future. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

With the Fizz loyalty program, you get rewarded just for having a mobile plan. You know, for texting and stuff. And if you're not getting rewards like extra data and dollars off with your mobile plan, you're not with Fizz. Switch today. Conditions apply. Details at fizz.ca. U.S. stocks plunge, losing more than $3 trillion in market value. Plus, why, amid a market sell-off, investors are turning to consumer-staple stocks.

And what a weaker dollar means for the U.S.'s economic future. What investors are realizing today is that the growth prospects of the U.S. are deteriorating. It's Thursday, April 3rd. I'm Alex Zosila for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. US stocks have suffered their biggest single-day wipeout in market value since the COVID route

in March 2020. Dozens of household name stocks posted double-digit declines, including HP, Nike, and Target. The U.S. dollar sank, oil and gold both fell, and investors dashed for the safety of Treasuries. The decline sets up financial markets for one of their most precarious periods in recent years, as the tariffs and the international reaction test the faith investors used to stick with stocks. The Dow fell more than 1,600 points, or about 4%. The S&P 500 slid about 5%. And the Nasdaq was down more than 1,000 points, ending the day roughly 6% lower.

All in all, U.S. stocks have lost roughly $3.1 trillion in market value. For more, I'm joined by WSJ Markets reporter Hannah Aaron-Leng. Well, Hannah, what a day it's been for the markets. What happened here today? It's fair to say that today was kind of a bloodbath for markets. We certainly got hints that that was coming. Stock futures started to turn lower last night after President Trump's speech, but this was really quite a dramatic day. So the S&P 500 fall a lot.

We saw the NASDAQ notch its largest one-day point decline on record. Treasury yields fell, the dollar fell. So there was turmoil in almost every corner of the market. And of course, what's driving this is professional investors and businesses just scrambling to adjust their plans and their strategies in response to what one analyst

called a worst of the worst case scenario when it comes to the president's tariff plans. I mean, there's so much that happened and so many things were affected, but I'm curious what stood out to you. This is something we've been monitoring for a while, but it was definitely cast in very stark terms today. The Magnificent Seven, these large cap tech stocks that were on top of the world for a while,

they suffered some really big losses today. The Roundtable Magnificent 7 ETF that tracks all of those as a group, it was down about 7%. Amazon and Apple were some of the biggest losers, around 8% or 9% losses today. But also I was just really surprised by the depth and breadth of these losses. As I mentioned, there wasn't really a part of the market that wasn't touched by this at some point today. Okay, lots of pain for investors today.

Is it over now? What happens next? Today might have been more intense than the days to come. This was the initial reaction, investors grappling with this plan that was much more severe than they had anticipated. But what I'm hearing from the sources that I talked to, whether they're professional portfolio managers or just individual investors, is that this volatility, these up and down days seem to be something that's going to stick around just because

of the potential impact of this plan. So this is definitely not the end of the effects that we're going to see from this plan and unfortunately not the end of what I expect will be continued volatility for investors as well. That was WSJ reporter Hannah Aaron-Lange. Hannah, thank you for being here. Thank you so much for having me. Amid today's broader sell-off,

some stocks fared better than others. I'm joined now by WSJ reporter Stephen Wilmott. Stephen, what kinds of companies saw their stock price rise today? In the European trading morning, we got, for example, the drinks makers, Diageo and Campari. Their stocks rose because there had been fears that their Mexican tequila imports to the US, which account for quite a dominant chunk of the US businesses these days, would be hit by tariffs because

the current exemption for USMCA compliant goods, that's goods that comply with the free trade area rules in North America, that that exemption would end and so the fact that it wasn't led to a bit of a relief for some sectors. Another one was pharma because pharmaceutical products were exempted. As the trading day has evolved, that's changed a bit because the liquor companies have started to trade down and that's because a bit because the liquor companies have started to trade down. That's because a consensus is starting to build that actually these tariffs could be recessionary and obviously that's not good for liquor companies. But pharmaceuticals are a traditional safe haven trade because people continue to buy

drugs even in recessions. I'm also seeing the share price go up for companies like Philip Morris, Nestle, InBev. What do they have in common? These are often considered consumer staples. They sell goods that people tend to buy whether in good times or in bad. Nestle sells pet food, formula, coffee, so things that people won't stop buying in a recession. Philip Morris, obviously cigarettes, a classic recession trade and Anhoiser-Busch beer Budweiser, which is considered a bit more of a staple alcoholic

drink than tequila, for example, which goes into high-end cocktails that you might consume in bars. So investors rotate into these consumer staple stocks in anticipation of a recession, in anticipation of consumers trading down into cheaper, more basic product categories. Some of the companies that started the day down quite a bit, including Nike, now they're starting to perhaps not look quite so much like anomalies, right? Yes, as you see of red at the moment, it started the day with a slightly more nuanced reaction, I would say. Adidas in European trading was one of the big losers early on in the European trading day following Nike in post-market trading in the US. And that's obviously because they imported a lot of shoes from Vietnam and Vietnam got hammered with particularly high reciprocal tariff and Southeast Asia

was in general the kind of big loser from the announcements. But then as the day is built the stock market pain has spread essentially and the recession trade is built so that everything that is generally macroeconomically sensitive has started to sell off. So bank financials, property stocks, things that have nothing to do with tariffs. That was WSJ reporter Stephen Wilmot. Thank you, Stephen. Thank you. Canadian Prime Minister Mark Carney said today that his country would match President Trump's auto tariffs with 25 percent tariffs of its own.

The levy would be on US vehicles that are not compliant with the US-Mexico-Canada trade pact. He said the counter-tariff would apply only to finished vehicles and wouldn't affect vehicle content from Mexico. Carney said the tariff could raise up to the equivalent of about 5.6 billion US dollars, which would be used to help workers and companies

affected by the Trump tariffs. The Canadian prime minister also told reporters at a press conference that President Trump's tariff order will rupture the global economy and increase the risk that the U.S. will fall into a recession. That, he said, would make it very difficult for Canada to avoid something similar. Coming up, Trump's tariffs were supposed to boost the dollar. Why is it falling instead? That's after the break.

Today's market sell-off was no surprise to analysts. But one thing they hadn't expected? A falling U.S. dollar. The dollar slipped to its lowest level of the year, sinking more than 2% against the euro, Japanese Yen, and Swiss Franc. I'm joined now by WSJ herd on the street columnist John Sindreou to discuss. Okay, John, what's going on here? Trump's tariffs were supposed to boost the dollar. Why is it falling?

One reason could be that the dollar was very expensive already, but that still doesn't explain why the drop was so obvious. And also, the dollar has been dropping most of the past month and a half, ever since Trump basically announced those big tariffs on Canada and Mexico. What investors are realizing today is that the growth prospects of the U.S. are deteriorating. And it turns out that even though they might be right that a tariff does mechanically push up the dollar, actually the growth part of it is far more important. So why did this catch analysts by surprise?

The vision that the dollar should go up has been around for quite a while. It kind of worked in the first Trump term when he put his first tariffs on China. But this time we knew the tariffs would be larger. Analysts were saying during the campaign, yeah, yeah, the tariffs will be dollar positive. And of course, this joins other policies that are attached to Trump, which are also supposed to be dollar positive, like cutting taxes and maybe interest rates will go up because of Trump. And that also means there's more money to be made in the US and people move more money there. But what they forgot is, yeah, that's fine. And sometimes it works. But the long term outlook on whether equity investors will make money here the next 15

years as they have this past 15 years rather than investing in other parts of the world, that's actually huge. So that's what the stock market is pricing in today. So just looking at where the dollar is right now, what does it tell us about the long term prospects for the U.S. economy? It's saying that this as a growth strategy is not a good one. This is not a growth strategy that reminds us of the cases where protectionism has had some success.

And when we look at the US economy, we don't see a coherent way to perhaps achieve the goals that the administration says that they want, such as bringing back manufacturing jobs and increasing productivity growth in what they've announced. So investors don't believe that this will lead to higher productivity growth, and they have good reason to not believe it. That was WSJ Hurt on the Street columnist John Sendreou. Thank you, John. Thank you.

In other news, several National Security Council staffers were fired this week after right-wing conspiracy theorist Laura Loomer alleged to President Trump that some members of his administration weren't aligned with his priorities. That's according to people familiar with the matter. The people said that four NSC aides were fired overnight and that two other NSC aides were let go on Sunday. The exact reasons for the staffers' ouster couldn't immediately be determined. NSC spokesman Brian Hughes declined to comment.

In a statement, Loomer declined to discuss her meeting with the president. And finally, President Trump's tariffs are truly global. Towards the bottom of the list of tariffs the White House released yesterday is an entry titled Herd and McDonald Islands, against which the US plans to levy a 10% tariff. Except the Herd and McDonald Islands don't have any people living there. Instead, the remote Australian territory, located about a thousand miles north of Antarctica, is home to a large colony of penguins. As Australian Prime Minister Anthony Albanese said,

nowhere on earth is exempt from this. And that's what's news for this Thursday afternoon. Today's show is produced by Anthony Bansi and Pierre Bienneme with supervising producer Michael Kazimidis. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.