US equity indexes plummeted after midday Thursday as investors evaluated the impact of uncertainty accompanying the 90-day pause on reciprocal tariffs and a trade war with China, the world's second-largest economy.

The Nasdaq plunged 5.7% to 16,149.1, with the S&P 500 sliding 4.9% to 5,194.6 and the Dow Jones Industrial Average 4.3% lower at 38,884.2. All sectors slumped intraday, with energy, technology, and consumer discretionary being the steepest decliners.

The gauges gave up a chunk of gains from a mega rally on Wednesday when President Donald Trump unveiled a pause on tariffs that came into effect after midnight. The president, however, excluded China from his global reprieve and instead increased the punitive import duties to 145%, reportedly including the 20% fentanyl trade levy set out earlier this year.

Trump has ratcheted up a trade war with China, brokerage D.A. Davidson said in a research note.

China will lower the number of US films allowed to enter the Asian country in response to the escalated tariffs by the Trump administration, China's National Film Administration said Thursday. Shares of Warner Bros Discovery (WBD) slumped 14% intraday, the second-worst performer on the Nasdaq.

The US economy is "still living on the edge," Morgan Stanley economists, including Michael Gapen, said in a note. The 90-day delay in reciprocal tariffs "reduces immediate downside risk, but prolongs uncertainty," Gapen said. With the effective tariff rate at 23%, there is a "narrow gap between a slow growth outlook and a downturn" in the US.

CarMax's (KMX) fiscal Q4 earnings rose sharply year over year, but missed Wall Street expectations, while the company suspended the timeframes related to its long-term objectives due to macro uncertainties. Shares sank 18% intraday, the worst performer on the S&P 500.

The CBOE Volatility Index, also known as the fear index, surged 51% to 50.05. The US Dollar depreciated 2.1% to 144.61 against the Japanese yen.

Gold futures soared 3.1% to $3,174.31 per ounce. West Texas Intermediate crude oil futures plunged 4.5% to $59.54 a barrel.

Most US Treasury yields fell, with the 10-year yield down 3.5 basis points to 4.36% and the two-year slumping 13.1 basis points to 3.82%.

In economic news, consumer inflation unexpectedly turned negative last month in what was its first monthly drop since May 2020, as a drop in energy prices more than offset gains in the food category, the Bureau of Labor Statistics said Thursday. The consumer price index fell 0.1% in March, compared with a Bloomberg-compiled consensus that called for a 0.1% increase. Prices were up 0.2% in February.

Annually, inflation cooled to 2.4% in March from the previous month's 2.8% and below Wall Street's estimate for 2.5%.

"The March consumer price index brought encouraging news on inflation, but this reflects what could've been, rather than what is ahead," Oxford Economics Chief US Economist Ryan Sweet said in remarks emailed to MT Newswires. "Energy was a sizable drag on the headline CPI in March and will be again in April, but the boost to inflation from tariffs is coming."

Meanwhile, US initial jobless claims rose to 223,000 in the week ended April 5 from an unrevised 219,000 in the previous week, as expected in a survey of analysts compiled by Bloomberg.