TheDrop Market Analysis, 04/04/25

Markets sank in record fashion for the second day in a row.

President Donald Trump.

The S&P 500 index fell 6%, the Dow index fell 5.5%, and the Nasdaq index fell 5.8%. In addition, the small business Russell 2000 index fell by 4.4%. Even the value of gold, the USD, and cryptocurrency all sank within a few days. Almost no large individual ticker even made gains today in the first place.

With today reminiscent of previous poor market days like the start of the COVID-19 Pandemic and, to a degree, the 1929 Wall Street Stock Market Crash, many Americans are interpreting today's performance as an indicator that something worse is pending. Comsumer confidence has hit all-time lows, even lower than some of the later months of the Biden presidency. The risk of recession rose to as high as 60%, according to a study conducted by JPMorgan, one of the most trusted economic analysts. This set investors in a selling-off frenzy, with thousands rushing into their portfolios to sell off before things get worse. Even the notable Warren Buffett, the most successful swing trader of our time, has made dangerous warnings to investors to sell now before it's too late-he previously sold billions in stock, including his large stake in Apple. Fortunately, for some this could be used to gain some quick profit, as many stocks reached unsustainably low share prices that could indicate them being undervalued.

But why did investors sell? Well, it's just one word, in fact the president's favorite word: tariffs. Although we are several days out from when Trump announced his "Liberation Day" list of tariffs on most of America's trading partners, investors are still anxious about the long-term economic impact of these tariffs. While the president and his administration affirmed these to be a diplomatic bargaining tool for reduced tariffs on the side of the foreign country tariffing us, instead many economists have raised concern that the cost of these tariffs will be passed down to the American consumer, worsening debt per capita, inflation, and the income inequality gap. As a result, succumbing to their wave of anxiety, investors sold off much of their equity.

The Magnificent 7 today became more like the "Terrible 7." Nvidia fell 7.4% to well below $100, Tesla fell 10.4%, Google fell 3.2%, Microsoft fell 3.6%, and Apple fell 7.3%. Most other large stocks performed just as worse if not more worse, like Intel (11.5%) and Palantir (11.5%). Exacerbating the situation, in the post market many of these stocks fell even more.

The sole large stock to gain traction in the sea of red today was GameStop, which rose 11.3% as a result of legal filings showing that its CEO, Ryan Cohen, has purchased 500,000 shares in the company.