Wall Street plunge pushes ‘fear gauge’ to 8-month high after Trump’s tariff sparks trade war with China – The Times of India-OxBig News Network

Wall Street’s top ‘fear gauge’ soared to an eight-month high on Friday as US stocks tumbled sharply after China imposed sweeping new tariffs on all US goods. This latest escalation in the trade war between the world’s two largest economies rattled global markets, deepening investor anxiety and fueling fears of an impending recession.
The Cboe Volatility Index (.VIX), an options-based measure of stock investors’ anxiety, spiked as much as 15.54 points to 45.56, its highest level since August. It later settled at 38.27, still up 8.25 points on the day. Historically, a VIX reading above 40 signals heightened fear and market stress, often indicative of systemic risks spreading across asset classes, as reported by Reuters.
“A VIX at 40 is a sign of fear for sure,” said Joe Tigay, portfolio manager for Rational Equity Armor Fund. “Usually, you see a 40 when there’s something more than the usual sell-off … some sort of credit risk, margin risk, something that could cause a contagion that could spill over and across to other asset classes.”
Not just US, markets worldwide were rattled by China’s swift retaliation to President Donald Trump’s latest tariffs. Beijing announced a 34% tariff on all US imports, effective April 10, directly responding to Washington’s decision to impose similar duties on Chinese goods. The move accelerated losses across global stock markets, with European indices suffering some of the day’s worst declines. Germany’s DAX plunged 4.6%, France’s CAC 40 dropped 4.1%, and Japan’s Nikkei 225 fell 2.8%.
The S&P 500 fell 3.5% in morning trading, deepening its year-to-date decline to about 15% and marking its worst day since the Covid-induced market crash of 2020. The Dow Jones Industrial Average plummeted 1,226 points, or 3%, while the Nasdaq Composite slid 3.4%. Stocks of companies with significant exposure to China were among the hardest hit. DuPont, facing a new Chinese antitrust investigation, plunged 14.5%. GE Healthcare, which derives 12% of its revenue from China, tumbled 13.3%. United Airlines, heavily reliant on trans-Pacific travel, dropped 11.7%.
The trade war’s impact was also felt in the commodity and bond markets. Crude oil prices fell to their lowest level since 2021, while copper and other industrial metals declined on concerns about slowing global growth. Meanwhile, the yield on the 10-year U.S. Treasury bond slid to 3.92% from 4.06% the previous day, reflecting growing expectations that the Federal Reserve may cut interest rates to mitigate economic damage. However, with inflation concerns mounting due to tariffs, the Fed’s ability to act remains constrained.
Despite a better-than-expected US jobs report showing strong hiring in March, the markets largely shrugged off the news, focusing instead on the broader economic uncertainties. “The world has changed, and the economic conditions have changed,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.
Trump, for his part, dismissed China’s actions as a miscalculation. Posting on his Truth Social platform in all-caps, he wrote, “CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!”
The US president has maintained that the tariffs, though painful in the short term, are necessary to bring manufacturing jobs back to the United States.
Looking ahead, much depends on whether the tariffs remain in place and how long the trade standoff lasts. Some analysts hold out hope that Trump will negotiate lower tariffs after securing key concessions. “The speed of recovery will depend on how, and how quickly, officials negotiate,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Meanwhile, international players like Vietnam and the European Union have signaled their intent to negotiate with the US to avoid further economic disruption. Israel has already eliminated customs duties on all US imports, expanding the free trade agreement and potentially reducing living costs.
As the markets go through the turmoil, investors are bracing for more volatility as the markets grapple with uncertainty over trade policy, interest rates, and global economic growth.