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Second day of chaotic sell-off since Trump tariff

announcement

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Global recession fears grow as retaliation begins

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Three benchmarks post largest two-day declines since March

2020

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Fed Chair Powell warns of tariff impact on inflation

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Indexes down: S&P 500 5.97%, Nasdaq 5.82%, Dow 5.5%

(New throughout, adds closing prices for individual shares,

milestones, weekly numbers and volume)

By David French

April 4 (Reuters) - Wall Street nosedived for a second

straight day on Friday, confirming the Nasdaq Composite was in a

bear market and the Dow Jones Industrial Average was in a

correction, as an escalating global trade war spurred the

biggest losses since the pandemic.

The Dow Jones Industrial Average, S&P 500 and

the Nasdaq Composite posted their largest two-day

declines since the emerging coronavirus caused global panic

during U.S. President Donald Trump's first term. For Thursday

and Friday, the Dow was down 9.3%, the S&P 500 10.5% and the

Nasdaq 11.4%.

Fallout from Trump's sweeping tariffs stoked fears of a

global recession, wiping trillions of dollars of value from U.S.

companies. Highlighting growing panic among investors, the CBOE

Volatility Index, or Wall Street's fear gauge, closed at

its highest level since April 2020.

Since late on Wednesday, when Trump boosted tariff barriers

to their highest level in more than a century, investors have

dumped stocks, fearing both the new U.S. economic reality and

also how U.S. trading partners might retaliate by steepening

their own trade barriers.

The Nasdaq slid on Friday 962.82 points, or 5.82%, to

15,587.79, confirming the tech-heavy index was in a bear market

compared to its record closing high of 20,173.89 on December 16.

Meanwhile, the Dow Jones Industrial Average fell

2,231.07 points, or 5.50%, to 38,314.86 points, confirming a

correction to its record closing high of 45,014.04 on December

4.

The S&P 500 lost 322.44 points, or 5.97%, to close at

5,074.08 points, its lowest finish in 11 months.

"Right now, how bad it gets depends on how committed the

administration is to this set of policies which, clearly, the

market is voting against," said Steve Sosnick, chief strategist

at Interactive Brokers.

Global governments began reacting to Trump's tariff

announcement on Friday, further undermining investor sentiment

that a global recession could be averted. JP Morgan said it was

forecasting a 60% chance of the global economy entering a

recession by year-end, up from 40% previously.

China's finance ministry said it would impose additional

tariffs of 34% on all U.S. goods from April 10. Meanwhile, the

prime ministers of Britain, Australia and Italy held talks on

how to respond to Trump's tariff salvo.

"We're in the Wild West of a trade war right now," said

Mariam Adams, managing director at UBS Wealth Management.

For the week, the S&P 500 fell 9.1%, the Dow declined

7.9%, and the Nasdaq slumped 10%.

Federal Reserve Chair Jerome Powell spoke publicly for the

first time since Trump's tariff announcement. Powell highlighted

the unexpectedly hefty tariffs could trigger higher inflation

and slower growth, setting the stage for challenging decisions

for U.S. central bankers.

Safe-haven buying in the bond market sent the yield on the

benchmark 10-year Treasury notes to below 4%.

This pushed U.S. bank stocks down further, with the sector

under pressure globally, as the prospect of interest rate cuts

from central banks and a hit to economic growth from tariffs

would crimp profitability. The S&P Banks index dropped

7.3%.

All 11 S&P sectors dropped by more than 4.5%, with energy

the leading laggard for the second straight day, off

8.7%, as companies tracked a 7.3% decline in U.S. crude prices.

U.S.-listed shares of Chinese companies dived, with JD.com ( JD )

and Alibaba ( BABA ) and Baidu ( BIDU ) all down more

than 7.7%.

Companies with exposure to China also fell across the board,

with mega-caps such as Apple ( AAPL ) dropping 7.3%.

The chipmakers index sank 7.6%, having declined 9.9%

the previous day. The sector is particularly vulnerable to a

double tariff whammy as many chip companies design their chips

in the U.S., but have them manufactured in China.

Volume on U.S. exchanges was 26.70 billion shares, compared

with the 16.61 billion average for the full session over the

last 20 trading days.