S&P 500 Closes Down 6%: What to Expect in the Next Trading Session

S&P 500 Suffers Steep Weekly Loss Amid Trade Turmoil

On Friday, April 4, 2025, the S&P 500 Index closed at 5,074.08, marking a dramatic 6% drop (a loss of 322.44 points) from the previous day. The plunge capped off a tumultuous week, registering the worst five-day performance for the benchmark index since the COVID-19-driven market shocks of 2020.

The drop was largely fueled by escalating trade tensions triggered by sweeping U.S. tariffs. The White House, under President Donald Trump, imposed a 10% blanket tariff on all imports, with significantly higher rates targeting China, the European Union, and the automotive sector. These aggressive protectionist measures sent shockwaves through global markets and sparked fears of a broader economic slowdown.

Market sentiment turned increasingly bearish throughout the week as major investors reacted to the policy shift. The selloff was further intensified by rising bond yields and concerns about retaliatory tariffs from key trade partners, particularly China, which responded with a matching 34% tariff on U.S. imports.

In response to Friday’s plunge, AP News noted that investors are now confronting a “high-alert environment,” where political decisions are exerting outsized influence over market behavior.

Monday Outlook: Volatility Expected to Continue

As global markets prepare to reopen, early indicators suggest that the turbulence is far from over. S&P 500 futures were trading more than 4% lower in pre-market action on Sunday evening, pointing to a potentially rough start to Monday’s session.

Asian markets opened sharply lower in reaction to the U.S. selloff and the intensifying trade standoff. Japan’s Nikkei 225 slid nearly 8%, while South Korea’s Kospi tumbled 4.6%. Australian markets also posted steep losses, reflecting widespread investor anxiety about the ripple effects of U.S. policy moves.

According to Reuters, the sentiment among global investors has turned risk-off, with capital flowing into traditional safe havens such as gold, U.S. Treasuries, and the Japanese yen. The expectation of retaliatory actions by the European Union and other key partners has only added to the uncertainty.

With the VIX, often referred to as Wall Street’s “fear gauge,” hitting multi-month highs, volatility is likely to remain a central theme in the week ahead. Investors should expect sharp swings and continued sensitivity to geopolitical developments.

Strategy for Investors: Patience and Prudence

While the current market environment may feel chaotic, financial experts are advising investors to avoid rash decisions. Historically, markets have shown resilience in the face of geopolitical uncertainty. Maintaining a long-term strategy and avoiding emotion-driven trades are key principles for navigating turbulent times.

As always, diversification remains a powerful tool for risk management. With the next trading session poised for another volatile day, staying informed and flexible will be critical for market participants aiming to weather the storm.