REUTERS

US stock indexes tumbled on Thursday, with heavyweight technology stocks suffering big losses, as President Donald Trump’s sweeping tariffs on major trade partners ignited fears of an all-out trade war and heightened the risk of a global economic recession.

Apple sank 8 percent reeling from the impact of an aggregate 54 percent tariff on China, which is the base for much of the iPhone maker’s manufacturing. Microsoft dropped 3 percent and Nvidia slumped 5.6 percent.

At 09:40am ET, the benchmark S&P 500 dropped 3.1 percent while the Nasdaq Composite fell 4.27 percent - with both indexes trading at a near seven-month low. The Dow Jones Industrial Average shed 2.6 percent.

Global stocks slumped, government bonds jumped and safe-haven gold touched a record high as Trump slapped a 10 percent tariff on most goods imported to the United States and much higher levies on dozens of rivals.

“This was the first bullet thrown in this trade war and it could get nasty and that is spooking investors. We’re going to continue to trade on a heavy tone because of the heightened risk of either recession or stagflation,” said Elias Haddad, senior markets strategist at Brown Brothers Harriman.

“We could see the correction bottom out when we have firm evidence that we’re not falling into recession.” The CBOE Volatility index, known as Wall Street’s fear gauge, touched a three-week high at 26.91 points.

The tariffs, poised to disrupt the global trade order and unsettle businesses, highlight a stark shift from just a few months ago when the promise of business-friendly policies under the Trump administration propelled US stocks to record highs.

The benchmark S&P 500 and the tech-heavy Nasdaq fell 10 percent from their record highs last month, marking a correction, as investors priced in the damage from tariffs on the economy and businesses.

Traders are ramping up expectations for the Federal Reserve to cut interest rates at least three times this year, with the possibility of a fourth cut by the year’s end becoming less of a long shot.

That heightens the significance of Friday’s payrolls data and Fed Chair Jerome Powell’s speech, which could offer crucial insights into the health of the US economy and the future path of interest rates.

Data on Thursday showed the number of Americans filing new applications for unemployment benefits fell last week, pointing to continued labor market stability ahead of potential volatility from import tariffs.