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(Bloomberg) -- Roughly $2.5 trillion was erased from the S&P 500 Index on Thursday amid worries that President Donald Trump’s sweeping new round of tariffs could plunge the economy into a recession.
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The damage was heaviest in companies whose supply chains are most dependent on overseas manufacturing. Apple Inc., which makes the majority of its US-sold devices in China, fell 9.3%. Lululemon Athletica Inc. and Nike Inc., among companies with manufacturing ties to Vietnam, were both down more than 9%. Target Corp. and Dollar Tree Inc., retailers whose stores are filled with products sourced outside of the US, dropped more than 10%.
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Few stocks in the US were unscathed as the benchmark notched its biggest decline since June 2020. More than 80% of companies in the S&P 500 dropped, with more than two-thirds sliding at least 2%.
“There’s really not anybody getting spared in absolute terms,” said Garrett Melson, a portfolio strategist at Natixis Investment Managers Solutions. “You’re just wrapped up, today at least, in a broad de-risking, and so it’s kind of just across the board taking chips off the table.”
The breadth and severity of the levies dwarfed those imposed by Trump during his first term, threatening to upend global supply chains, exacerbate an economic slowdown and boost inflation. It also left investors struggling to game out what levies would do to corporate profits.
If Apple, for example, were to absorb the jump in costs as a result of tariffs on China, the iPhone maker’s gross margin could take a hit of as much as 9%, said Citigroup analysts led by Atif Malik.
The plan is equivalent to the largest tax increase since 1968, JPMorgan economist Michael Feroli wrote in a note. It could add as much as 1.5% to prices this year, using the Federal Reserve’s preferred inflation gauge, while weighing on personal incomes and consumer spending.
“This impact alone could take the economy perilously close to slipping into recession,” Feroli wrote. “And this is before accounting for the additional hits to gross exports and to investment spending.”
US assets emerged as the biggest losers after the announcement. The S&P 500 fell 4.8%, and a gauge of the dollar slumped. The impact elsewhere was muted in comparison: A broad gauge of Asian stocks fell less than 1% and the Stoxx Europe 600 slid 2.6%, while the euro rose about 1.6% against the dollar.