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Apple ( AAPL ) leads decline among Big Tech

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Retail stocks slump on Asia tariff worries

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Wall St fear gauge hits 3-week high

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Futures down: Dow 2.73%, S&P 500 3.33%, Nasdaq 3.83%

(Updates with more context throughout, analyst comment, fresh

prices)

By Sruthi Shankar and Pranav Kashyap

April 3 (Reuters) -

U.S. stock index futures plunged on Thursday as President

Donald Trump's

sweeping tariffs

on major trade partners sparked fears of a full-blown trade

war and raised the risk of tipping the global economy into a

recession.

Global stocks slumped, government bonds jumped and

safe-haven gold touched a record high as Trump slapped a 10%

tariff on most goods imported to the United States and much

higher levies on dozens of rivals.

Futures tracking the S&P 500 fell 3.33% by 07:08

a.m. ET (1208 GMT), Dow futures dropped 2.73%, while

Nasdaq 100 e-minis tumbled 3.83%, led by declines in

shares of megacap tech companies.

Apple ( AAPL ) sank 7.4%, reeling from the impact of an

aggregate 54% tariff on China, which is the base for much of

Apple's ( AAPL ) manufacturing. Microsoft ( MSFT ) dropped 2.5% and

Nvidia ( NVDA ) fell 5.3%.

"This was the first bullet thrown in this trade war and it

could get nasty and that is spooking investors. We're going to

continue to trade on a heavy tone because of the heightened risk

of either recession or stagflation," said Elias Haddad, senior

markets strategist at Brown Brothers Harriman.

"We could see the correction to bottom out when we have

firm evidence that we're not falling into recession."

The tariffs, poised to disrupt the global trade order and

unsettle businesses, represent a stark shift from just a few

months ago when the promise of business-friendly policies under

the Trump administration propelled U.S. stocks to record highs.

Futures tracking the U.S. small-cap Russell 2000 index

tumbled 4.5%, underscoring concerns about the health of

the domestic economy.

Retailers were hit hard on Thursday, with Nike ( NKE ) dropping

9.8% and Walmart ( WMT ) falling 4.9% after Trump imposed a raft

of new tariffs on major production hubs including Vietnam,

Indonesia and China.

Big banks such as JPMorgan Chase & Co ( JPM ), Citigroup ( C/PN )

and Bank of America Corp ( BAC ), which are sensitive to

economic risks, dropped more than 3.5% each.

U.S. Treasury yields dived to multi-month lows, with the

benchmark 10-year yield falling to a more than

five-month low of 4.04%.

The CBOE Volatility index, known as Wall Street's

fear gauge, touched a three-week high at 26.18 points.

Traders are ramping up expectations for the Federal Reserve

to cut interest rates at least three times this year, with the

possibility of a fourth cut by the year's end becoming less of a

long shot.

That heightens the significance of Federal Reserve Chair

Jerome Powell's upcoming speech on Friday, as it could provide

crucial insights into the health of the U.S. economy and the

future path of interest rates.

"The prospect of looser monetary policy and potentially

greater fiscal stimulus once the Trump administration announces

the tax cut plan should provide some support to equity markets,"

Haddad added.

Investors are also looking ahead to U.S. non-farm

payrolls report on Friday.

Data on weekly jobless claims and U.S. services sector

activity are due later in the day.