U.S. companies were pounded again in the stock market on Friday after China matched President Donald Trump's tariffs in what is quickly becoming an escalating trade war.
Few sectors were spared, and the S&P 500 ended with its biggest single-day drop since COVID-19 paralyzed the global economy five years ago.
Companies that sell their products to China were hit hard on Friday, including those in the aerospace, agricultural, and heavy machinery sectors.
Some of Thursday's biggest losers, such as banks, airlines, and technology companies, fell further on Friday. Other sectors, such as retail, apparel, and restaurants, also fell, but less sharply. A small group, such as Nike, even posted modest gains on Friday.
The so-called"Magnificent 7" stocks that have dominated the market in recent years suffered some of the most significant losses. Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla collectively lost around $1.8 trillion in market value in the past two days.
Tariffs are, in practice, a business tax passed on to consumers. If the prices of goods and services increase, consumers may tighten their budgets and reduce their spending on non-essential goods and services.
Consumer spending accounts for about 70% of economic activity in the United States. A significant decline in demand would cause businesses to produce fewer goods, limiting growth and potentially causing a recession.
JPMorgan raised its recession risk forecast to 60% on Thursday, up from 40% previously.
The three major U.S. stock indexes fell more than 5% on Friday.
Agriculture and heavy machinery
Some of the United States' largest exports to China are heavy machinery and oilseeds and grains.
Deere & Co. fell 3.9% on Friday after losing 5% on Thursday.
Archer-Daniels-Midland fell 8.9% on Friday after losing 0.8% on Thursday.
Caterpillar fell 5.8% on Friday after losing 8.6% on Thursday.
Aerospace and defense
Aerospace companies also export their products to China in significant numbers. As part of its retaliation on Friday, China imposed more controls on rare earth exports, which include materials used in high-tech products, aerospace manufacturing, and the defense sector.
Boeing fell 9.5% on Friday after losing 10.5% on Thursday.
General Dynamics fell 7.3% on Friday after losing 2.3% on Thursday.
Airlines
Airlines had projected a strong year in terms of profits. However, if Americans face higher prices for essential goods, economists warn this could restrict their travel budgets.
United Airlines fell 4.3% on Friday after losing 15.6% on Thursday.
American Airlines fell 0.5% on Thursday after losing 10.3% on Thursday.
Delta Air Lines fell 3.8% on Friday after losing 10.7% on Thursday.
Companies that manufacture and sell computers, smartphones, and other technological devices source many of their components from abroad. Some manufacture their products entirely abroad, which means they will have to pay tariffs when those products are shipped back for sale to consumers.
Apple fell 7.3% on Friday after losing 9.3% on Thursday.
HP fell 4.9% on Friday after losing 14.7% on Thursday.
Dell fell 7.3% on Friday after losing 19% on Thursday.
Nvidia fell 7.4% on Friday after losing 7.8% on Thursday.
If the economy enters a recession, households and businesses will be less likely to borrow due to the decline in demand for goods and services.
Wells Fargo fell 7.1% on Friday after losing 9.1% on Thursday.
Bank of America fell 7.6% on Friday after losing 11.1% on Thursday.
JPMorgan Chase fell 8% on Friday after losing 7% on Thursday.
Surprisingly, automakers weren't hit as hard as most other sectors on Thursday. This could be because most of the steel and aluminum used by Ford, GM, and Stellantis—on which Trump had previously announced tariffs—already comes from the United States, reducing the direct impact companies would experience from higher tariffs.
General Motors fell 3.7% on Friday after losing 4.3% on Thursday.
Ford rose 0.4% on Friday after losing 6% on Thursday.
Tesla fell 10.4% on Friday after losing 5.5% on Thursday.
Stellantis fell 4.8% on Friday after losing 9.4% on Thursday.
