Financial markets were hit by another wave of selling on Sunday evening, with investors and economists grappling with rising odds of a severe economic downturn caused by President Trump’s significant new tariffs on imports.
Futures on the S&P 500, which allow investors to bet on the index before the official start of trading on Monday, dropped roughly 4 percent on Sunday evening. In oil markets, which also open for trading on Sunday evening, prices fell more than 3 percent — adding to steep losses last week. And the price of copper, considered a broad economic indicator, slid more than 5 percent.
The 10.5 percent drop in the S&P 500 on Thursday and Friday was the worst two-day decline for the index since the onset of the coronavirus pandemic in 2020.
The only other instances of a worse two-day drop came during the 2008 financial crisis and the 1987 stock market crash, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. In dollar terms, the more than $5 trillion that was wiped out in the S&P’s value in the two days last week stands unmatched.
Even more unusual is that last week’s sell-off stemmed directly from presidential policy. Mr. Trump has so far brushed off concerns about the market reaction and potential economic consequences, showing little intention of backing down.
“If they’re maintained, the tariff hikes announced April 2 represent a self-inflicted economic catastrophe for the United States,” Preston Caldwell, senior U.S. economist for Morningstar Research Services, said in a blog post on Friday.
The historically high tariffs that Mr. Trump announced on Wednesday caught investors, economists and businesspeople off guard, upending global economic forecasts.
Chief executives have begun warning consumers that they should expect prices to increase on some groceries, clothes and other products. Consumers have said they intend to rein in spending on big-ticket items. Some auto companies have already announced production pauses overseas, as well as job losses domestically. Bank economists have raised the odds that a recession will hit the United States over the next 12 months. As countries responded last week with tariffs of their own, the sell-off in financial markets accelerated.
The hedge fund manager Bill Ackman said on the social media platform X on Sunday that he supported Mr. Trump’s attempt to fix global tariffs, but implored the president to call a “90-day time out” on Monday.
Otherwise, “we are heading for a self-induced, economic nuclear winter, and we should start hunkering down,” he said. “May cooler heads prevail.”
Keir Starmer, the British prime minister, warned on Saturday that “the world as we knew it has gone” and urged countries not to retaliate against the United States and enter a full-blown trade war.
The S&P 500 is now 17.4 percent below its peak reached in February, on course to enter a bear market, defined as a drop of 20 percent or more from a recent peak.
The Nasdaq Composite index, which is chock-full of tech stocks that came under pressure as the sell-off accelerated last week, is already in a bear market, down almost 23 percent from its December peak. The Russell 2000 index of smaller companies that are more sensitive to the outlook for the economy has fallen over 25 percent from its November peak.
Still, some investors remain cautiously optimistic that the solid economy from the start of this year will withstand the onslaught of high tariffs, before the president turns to tax cuts and deregulation to stimulate the economy and avoid a recession.
Scott Bessent, the Treasury secretary, said on Sunday on the NBC program “Meet The Press” that he saw “no reason” to expect a recession.
Other analysts cautioned that the damage to the economy will depend on how long tariffs remain at elevated levels.
“We remain very cautious,” said Stuart Kaiser, an equity analyst at Citi. Even with last week’s drop, he said, markets may have further to fall because earnings and economic growth expectations remain “well above levels consistent with announced tariff levels.”
