Dow drops 1,600 as US stocks lead worldwide sell-off after Trump’s tariffs cause a COVID-like shock

NEW YORK (AP) — Wall Street shuddered, and a level of shock unseen since COVID’s outbreak tore through financial markets worldwide Thursday on worries about the damage President Donald Trump’s newest set of tariffs could do to economies across continents, including his own.

The S&P 500 sank 4.8%, more than in major markets across Asia and Europe, for its worst day since the pandemic crashed the economy in 2020. The Dow Jones Industrial Average dropped 1,679 points, or 4%, and the Nasdaq composite tumbled 6%.

Little was spared in financial markets as fear flared about the potentially toxic mix of weakening economic growth and higher inflation that tariffs can create.

Everything from crude oil to Big Tech stocks to the value of the U.S. dollar against other currencies fell. Even gold, which hit records recently as investors sought something safer to own, pulled lower. Some of the worst hits walloped smaller U.S. companies, and the Russell 2000 index of smaller stocks dropped 6.6% to pull more than 20% below its record.

Investors worldwide knew Trump was going to announce a sweeping set of tariffs late Wednesday, and fears surrounding it had already pulled Wall Street’s main measure of health, the S&P 500 index, 10% below its all-time high. But Trump still managed to surprise them with “the worst case scenario for tariffs,” according to Mary Ann Bartels, chief investment officer at Sanctuary Wealth.

Trump announced a minimum tariff of 10% on imports, with the tax rate running much higher on products from certain countries like China and those from the European Union. It’s “plausible” the tariffs altogether, which would rival levels unseen in roughly a century, could knock down U.S. economic growth by 2 percentage points this year and raise inflation close to 5%, according to UBS.

Such a hit would be so big that it “makes one’s rational mind regard the possibility of them sticking as low,” according to Bhanu Baweja and other strategists at UBS.

Trump has previously said tariffs could cause “a little disturbance” in the economy and markets, and on Thursday he again downplayed the impact as he left the White House to fly to Florida.

“The markets are going to boom, the stock is going to boom and the country is going to boom,” Trump said.

Wall Street had long assumed Trump would use tariffs merely as a tool for negotiations with other countries, rather than as a long-term policy. But Wednesday’s announcement may suggest Trump sees tariffs more as helping to solve an ideological goal than as an opening bet in a poker game. Trump on Wednesday talked about wresting manufacturing jobs back to the United States, a process that could take years.

If Trump follows through on his tariffs, stock prices may need to fall much more than 10% from their all-time high in order to reflect the recession that could follow, along with the hit to profits that U.S. companies could take. The S&P 500 is now down 11.8% from its record set in February.

“Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade,” said Sean Sun, portfolio manager at Thornburg Investment Management, though he sees Trump’s announcement on Wednesday as more of an opening move than an endpoint for policy.

Trump offered an upbeat reaction after he was asked about the market’s drop as he left the White House to fly to his Florida golf club on Thursday.

“I think it’s going very well,” he said. “We have an operation, like when a patient gets operated on and it’s a big thing. I said this would exactly be the way it is.”

One wild card is that the Federal Reserve could cut interest rates in order to support the economy. That’s what it had been doing late last year before pausing in 2025. Lower interest rates help by making it easier for U.S. companies and households to borrow and spend.

Yields on Treasurys tumbled in part on rising expectations for coming cuts to rates, along with general fear about the health of the U.S. economy. The yield on the 10-year Treasury fell to 4.04% from 4.20% late Wednesday and from roughly 4.80% in January. That’s a huge move for the bond market.

The Fed may have less freedom to move than it would like, though. While lower rates can goose the economy, they can also push upward on inflation. And worries are already worsening about that because of tariffs, with U.S. households in particular bracing for sharp increases to their bills.

The U.S. economy at the moment is still growing, of course. A report on Thursday said fewer U.S. workers applied for unemployment benefits last week. Economist had been expecting to see an uptick in joblessness, and a relatively solid job market has been the linchpin keeping the economy out of recession.

A separate report said activity for U.S. transportation, finance and other businesses in the services industry grew last month. But the growth was weaker than expected, and businesses gave a mixed picture of how they see conditions.

Worries about a potentially stagnating economy and high inflation knocked down all kinds of stocks, leading to drops for four out of every five that make up the S&P 500.

Best Buy fell 17.8% because the electronics that it sells are made all over the world. United Airlines lost 15.6% because customers worried about the global economy may not fly as much for business or feel comfortable enough to take vacations. Target tumbled 10.9% amid worries that its customers, already squeezed by still-high inflation, may be under even more stress.

All told, the S&P 500 fell. 274.45 points to 5,396.52 The Dow Jones Industrial Average sank 1,679.39 to 40,545.93, and the Nasdaq composite tumbled 1,050.44 to 16,550.61.

In stock markets abroad, indexes fell sharply worldwide. France’s CAC 40 dropped 3.3%, and Germany’s DAX lost 3% in Europe.

Japan’s Nikkei 225 sank 2.8%, Hong Kong’s Hang Seng lost 1.5% and South Korea’s Kospi dropped 0.8%.

AP Writers Matt Ott, Elaine Kurtenbach and Darlene Superville contributed.

Bill Lawrence works on the floor at the New York Stock Exchange in New York, Thursday, April 3, 2025. (AP Photo/Seth Wenig)

James Conti works on the floor at the New York Stock Exchange in New York, Thursday, April 3, 2025. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Thursday, April 3, 2025. (AP Photo/Seth Wenig)

A trader works on the floor at the New York Stock Exchange in New York, Thursday, April 3, 2025. (AP Photo/Seth Wenig)

Aman Patel works on the floor at the New York Stock Exchange in New York, Thursday, April 3, 2025. (AP Photo/Seth Wenig)

Robert Greason works on the floor at the New York Stock Exchange in New York, Thursday, April 3, 2025. (AP Photo/Seth Wenig)

Mike Pistillo Jr., center, works with other traders on the floor at the New York Stock Exchange in New York, Thursday, April 3, 2025. (AP Photo/Seth Wenig)

Joseph D'Arrigo works on the floor at the New York Stock Exchange in New York, Thursday, April 3, 2025. (AP Photo/Seth Wenig)

Mike Pistillo Jr., center, works with other traders on the floor at the New York Stock Exchange in New York, Thursday, April 3, 2025. (AP Photo/Seth Wenig)

A currency trader watches monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, top right, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, April 4, 2025. (AP Photo/Ahn Young-joon)

Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, April 3, 2025. (AP Photo/Ahn Young-joon)

People walk past an electronic stock board showing Japan's stock prices at a securities firm Thursday, April 3, 2025 in Tokyo.(AP Photo/Shuji Kajiyama)

People walk past an electronic stock board showing the day's early loss of Japan's Nikkei 225 index at a securities firm Thursday, April 3, 2025 in Tokyo.(AP Photo/Shuji Kajiyama)

People walk past an electronic stock board showing the day's early loss of Japan's Nikkei 225 index at a securities firm Thursday, April 3, 2025 in Tokyo.(AP Photo/Shuji Kajiyama)

U.S. President Donald Trump is seen on a screen as currency traders work at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, April 3, 2025. (AP Photo/Ahn Young-joon)

U.S. President Donald Trump is seen on a screen as a currency trader works at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, April 3, 2025. (AP Photo/Ahn Young-joon)

People look at an electronic stock board showing the day's early loss of Japan's Nikkei 225 index at a securities firm Thursday, April 3, 2025 in Tokyo.(AP Photo/Shuji Kajiyama)

An electronic stock board shows the day's early loss of Japan's Nikkei 225 index at a securities firm Thursday, April 3, 2025 in Tokyo.(AP Photo/Shuji Kajiyama)

People walk past an electronic stock board showing the day's early loss of Japan's Nikkei 225 index at a securities firm Thursday, April 3, 2025 in Tokyo.(AP Photo/Shuji Kajiyama)

The exterior of the New York Stock Exchange is seen shortly after the close of the market, Wednesday, April 2, 2025. (AP Photo/Patrick Sison)

Wall Street signs are displayed outside the New York Stock Exchange in New York, Wednesday, April 2, 2025. (AP Photo/Seth Wenig)

SANTO DOMINGO, Dominican Republic (AP) — Memorials were taking place Thursday for a merengue star and others killed when a cement roof collapsed at a popular nightclub in the Dominican Republic, as the number of dead surged to 221 and crews searched for more bodies under the rubble.

Mourners clad in black and white streamed into Santo Domingo’s National Theater, where the body of Rubby Pérez lay inside a closed coffin. Pérez had been performing on stage at the Jet Set club early Tuesday when the roof fell in.

President Luis Abinader and first lady Raquel Arbaje arrived at the theater and stood beside Pérez's coffin for several minutes. Some mourners doubled over in tears as a recording of Pérez singing the national anthem was played. Renowned Dominican musician Juan Luis Guerra was among those gathered to pay their respects.

Pérez turned to music after a car accident left him unable to pursue a dream of becoming a professional baseball player. He was known for hits including “Volveré," which he sang as a member of Wilfrido Vargas's orchestra, and “Buscando tus besos" as a solo artist.

Blocks away from his memorial, crews continued the grim hunt for victims and survivors. No one has been found alive since Tuesday afternoon.

“We’ve practically combed through ground zero,” said Juan Manuel Méndez, director of the Center of Emergency Operations, adding that crews were focusing on one last small area of rubble.

Later Thursday, Méndez broke down while addressing reporters.

“Thank you, God, because today we accomplished the most difficult task I’ve had in 20 years,” he said, moving the microphone away from his face as he cried. Other officials patted him on the back as he continued, “Please forgive me,” before passing the microphone to an army official.

Officials said 189 people have been rescued alive from the rubble. More than 200 were injured, with 24 of them still hospitalized, including eight in critical condition.

“If the trauma is too great, there’s not a lot of time” left to save patients in that condition, said Health Minister Víctor Atallah.

He and other doctors said some of the injured suffered fractures to the skull, femur and pelvis. The legendary club in Santo Domingo was packed with musicians, professional athletes and government officials when dust began falling from the ceiling and into people’s drinks early Tuesday. Minutes later, the roof collapsed.

Since then, dozens of people have been anxiously waiting for news of their loved ones, growing frustrated with the drip-drip of information provided by hospitals and the country’s forensic institute.

At least 146 bodies have been identified, authorities said Thursday.

María Luisa Taveras told TV station Noticias SIN that she was looking for her sister.

“We have gone everywhere they have told us,” she said, her voice breaking.

Taveras said the family has spread out, with a relative stationed at each hospital and at the National Institute of Forensic Pathology. Dozens of people waited at the institute on Thursday, wearing face masks and complaining about the smell as they demanded the release of their loved ones' bodies.

“The odor is unbearable,” said Wendy Sosa, who has been waiting since Wednesday morning for the body of her cousin, 61-year-old Nilka Curiel González. Sosa told The Associated Press by phone that the situation was “chaotic,” and that officials had set up a refrigerated container to handle the volume of bodies being delivered.

She wept as she described her cousin as gracious and authentic. “Very empathetic," Sosa said. "She was a very helpful person.”

Victims identified so far include former MLB players Octavio Dotel and Tony Enrique Blanco Cabrera; and Nelsy Cruz, the governor of the northwestern province of Montecristi whose brother is seven-time Major League Baseball All-Star Nelson Cruz.

Dotel will be buried Thursday in Santo Domingo. Hundreds of people attended his wake on Wednesday, including Hall of Famer David Ortiz, formerly of the Boston Red Sox. Ortiz said the number of people who attended Dotel’s wake spoke volumes.

“He was a person whom everyone loved,” Ortiz told reporters. “It’s very hard, very hard, truly.”

Also killed was a retired United Nations official; saxophonist Luis Solís, who was playing onstage when the roof fell; New York-based fashion designer Martín Polanco; the son and daughter-in-law of the minister of public works; the brother of the vice minister of the Ministry of Youth; and three employees of Grupo Popular, a financial services company, including the president of AFP Popular Bank and his wife.

More than 20 victims came from Haina, Rubby Pérez's hometown, just southwest of Santo Domingo.

On Thursday, the governor held a communal wake, setting up 10 stands for coffins beneath a banner that read: “Haina bids farewell to her beloved children with immense sorrow.”

Among the mourners was Juancho Guillén, whose brother, sister and brother-in-law died at Jet Set.

“This family is in shock, is devastated. We’re practically dead too,” he told Noticias SIN, adding that his wife also died three months ago.

Minutes after the roof collapsed, the 911 system received more than 100 calls, many of those made by people buried under the rubble, said Randolfo Rijo Gómez, the system's director.

He noted that police arrived at the scene in 90 seconds, followed minutes later by first response units. In less than half an hour, 25 soldiers, seven fire brigades and 77 ambulances were activated, he said.

Prosecutors also arrived at the scene. It is still unclear what caused the roof to collapse or when the building was last inspected. The government said late Wednesday that once the recovery phase ends, it will launch a thorough investigation.

The club issued a statement saying it is cooperating with authorities. A spokesperson for the family that owns the club told The Associated Press that she passed along questions about potential inspections.

Coto reported from San Juan, Puerto Rico.

Dominican Republic President Luis Abinader, center right, and his wife Raquel Arbaje Soni speak with the family of Dominican singer Rubby Perez who died in the roof collapse at the Jet Set nightclub while performing in concert, during the wake at the Eduardo Brito National Theater in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

Workers prepare a crane on the third day of rescue efforts at the Jet Set nightclub after its roof collapsed during a merengue concert in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

Dominican singer Juan Luis Guerra, left, attends a wake of Rubby Perez, the merengue singer who was performing at the Jet Set nightclub when its roof collapsed, killing more than 200 people, at the National Theater in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

An excavator removes concrete at the Jet Set nightclub after its roof collapsed three nights before during a merengue concert in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

Zulinka, center, the daughter of Dominican singer Rubby Perez who died in the roof collapse at the Jet Set nightclub during his merengue concert, cries during his wake at the Eduardo Brito National Theater in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

The hat and sunglasses of Dominican singer Rubby Perez, who died in the roof collapse at the Jet Set nightclub during his merengue concert, sit on his casket during his wake at the Eduardo Brito National Theater in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

An image of victim Nelsy Cruz, governor of Montecristi, is seen at a makeshift vigil for the victims of the Jet Set club roof collapse, Wednesday, April 9, 2025, in New York. (AP Photo/Adam Gray)

Rescue workers carry the recovered body of a victim who died when the roof collapsed two nights prior at the Jet Set nightclub during a merengue concert, in Santo Domingo, Dominican Republic, Wednesday, April 9, 2025. (AP Photo/Ricardo Hernandez)

Soldiers prepare to assist with security during the rescue effort at Jet Set nightclub after its roof collapsed during a merengue concert in Santo Domingo, Dominican Republic, Wednesday, April 9, 2025. (AP Photo/Ricardo Hernandez)

A poster of victim Rubby Perez is seen at a makeshift vigil for the victims of the Jet Set club roof collapse in the Dominican Republic, Wednesday, April 9, 2025, in New York. (AP Photo/Adam Gray)

People attend a Mass for the victims of the Jet Set club roof collapse, at St. Elizabeth's Church, Wednesday, April 9, 2025 in New York. (AP Photo/Adam Gray)

People attend a Mass for the victims of the Jet Set club roof collapse at St. Elizabeth's Church, Wednesday, April 9, 2025 in New York. (AP Photo/Adam Gray)

People pray for their missing relatives outside Jet Set nightclub after its roof collapsed during a merengue concert in Santo Domingo, Dominican Republic, Wednesday, April 9, 2025. (AP Photo/Ricardo Hernandez)

Rescue workers carry the recovered body of a victim who died when the roof collapsed two nights prior at the Jet Set nightclub during a merengue concert, in Santo Domingo, Dominican Republic, Wednesday, April 9, 2025, (AP Photo/Ricardo Hernandez)

Rescue workers search for bodies at the Jet Set nightclub after its roof collapsed during a merengue concert in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

Rescue workers search for bodies at the Jet Set nightclub after its roof collapsed during a merengue concert in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

Rescue workers carry the recovered body of a victim who died when the roof collapsed two nights prior at the Jet Set nightclub during a merengue concert in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

Rescue workers search for bodies at the Jet Set nightclub after its roof collapsed during a merengue concert in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

Rescue workers carry the recovered body of a victim in Santo Domingo, Dominican Republic, Thursday, April 10, 2025 who died when the roof collapsed two nights prior at the Jet Set nightclub during a merengue concert. (AP Photo/Matias Delacroix)

A man sleeps on bottles of water in Santo Domingo, Dominican Republic, Thursday, April 10, 2025, in front of the Jet Set nightclub after its roof collapsed during a merengue concert. (AP Photo/Matias Delacroix)

Rescue workers carry the recovered body of a victim who died when the roof collapsed two nights prior at the Jet Set nightclub during a merengue concert in Santo Domingo, Dominican Republic, Thursday, April 10, 2025. (AP Photo/Matias Delacroix)

People who spent all night at the site of the Jet Set nightclub in Santo Domingo, Dominican Republic, Thursday, April 10, 2025, continue to wait for news of survivors after its roof collapsed two nights prior during a merengue concert. (AP Photo/Matias Delacroix)

Rescue workers carry the recovered body of a victim in Santo Domingo, Dominican Republic, Thursday, April 10, 2025 who died when the roof collapsed two nights prior at the Jet Set nightclub during a merengue concert. (AP Photo/Matias Delacroix)

Women cry during the search for survivors at the Jet Set nightclub after its roof collapsed two nights prior during a merengue concert in Santo Domingo, Dominican Republic, Wednesday, April 9, 2025. (AP Photo/Ricardo Hernandez)

Family members wait to identify the remains of their loved who died when the roof collapsed at the Jet Set nightclub during a merengue concert, in a parking lot of the National Institute of Forensic Pathology in Santo Domingo, Dominican Republic, Wednesday, April 9, 2025, (AP Photo/Marvin Del Cid)

Rescue workers stand next to a recovered body of a victim who died when the roof collapsed two nights prior at the Jet Set nightclub during a merengue concert, in Santo Domingo, Dominican Republic, Wednesday, April 9, 2025, (AP Photo/Ricardo Hernandez)