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U.S. STOCKS END DEEPLY RED, NOW ONTO PAYROLLS

U.S. stocks ended deeply in the red on Thursday and the Nasdaq Composite posted its biggest daily drop since March 2020 as traders worried that higher than expected country tariffs announced by U.S. President Donald Trump on Wednesday will send the economy into a recession.

"The market reaction makes it very clear that last night's announcement was worse than expected,” said Hugh Gimber, global markets strategist at J.P. Morgan Asset Management.

“The key question we're focused on is how and when policy volatility showing up in economic data might prompt a shift to a more moderate approach. (U.S.) labour market data tomorrow becomes even more important than normal, investors will be looking to understand how businesses are reflecting this uncertainty in their hiring plans,” he said.

The Nasdaq .IXIC was the weakest performer, dropping by almost 6%. It has now fallen about 18% from its record high close, with the S&P 500 .SPX down 12.2% and the Dow Jones Industrial Average .DJI down 9.93%.

Energy .SPNY led sector losses with a 7.5% drop as crude oil CLcv1 tumbled around 7% on the day.

Even as traders worry about a U.S. economic downturn, fears that the tariffs could boost inflation may also keep the Federal Reserve on hold.

Traders have nonetheless increased bets on more rate cuts this year, with the U.S. central bank now expected to cut rates by 93 basis points by year-end. This translates into four 25 basis point cuts being seen as the most likely scenario, with the first one being priced in for June.

The Fed is likely to be reticent to resume cuts, however, until there is clear deterioration in the labor market.

Friday’s payrolls report for March is expected to show that employers continued to hire at a solid clip, adding 135,000 jobs during the month. The unemployment rate is also likely to stay steady at 4.1%, according to the median estimate of economists’ polled by Reuters.

Here is Thursday’s closing market snapshot:

(Karen Brettell, Lisa Pauline Mattackal, Terence Gabriel)

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FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:

DESPITE STOCK TUMBLE, MARKETS SEE LITTLE RECESSION RISK - CLICK HERE

NOW WHAT? AS STOCKS TUMBLE, KEEP AN EYE ON THE VIX - CLICK HERE

POST LIBERATION DAY ECONOMICS: JOBLESS CLAIMS, LAYOFFS, SERVICES PMI, TRADE - CLICK HERE

S&P 500 SINKS AMID MOUNTING RECESSION FEARS - CLICK HERE

GEARING DOWN CRUISE MODE: SCOTIABANK DOWNGRADES US EQUITIES AFTER LATEST TARIFFS - CLICK HERE

S&P 500 FUTURES TRADE SHARPLY LOWER ON TARIFF TUMULT - CLICK HERE

DON'T BANK ON FED CUTS AFTER TARIFFS - COLUMBIA THREADNEEDLE CIO - CLICK HERE

TENTATIVE OPTIMISTS MULL BEST OUTCOME AFTER TRUMP TARIFFS - CLICK HERE

TARIFF RISKS, IS PHARMA OUT OF THE WOODS? - CLICK HERE

DEFENSIVE BUYING LIMITS THE DAMAGE - CLICK HERE

EUROPE BEFORE THE BELL: HEAVY SELLOFF COMING - CLICK HERE

SEEMS INVESTORS REALLY DON'T LIKE TARIFFS - CLICK HERE