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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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Indexes down: Dow 2.6%, S&P 500 3.1%, Nasdaq 4.27%

(Updates with market open prices)

By Sruthi Shankar and Pranav Kashyap

April 3 (Reuters) -

U.S. stock indexes tumbled on Thursday, with heavyweight

technology stocks suffering big losses, as President Donald

Trump's sweeping tariffs on major trade partners ignited fears

of an all-out trade war and heightened the risk of a global

economic recession.

Apple ( AAPL ) sank 8%, reeling from the impact of an

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

iPhone maker's manufacturing. Microsoft ( MSFT ) dropped 3% and

Nvidia ( NVDA ) slumped 5.6%.

At 09:40 a.m. ET, the benchmark S&P 500 dropped 3.1%,

while the Nasdaq Composite fell 4.27% - with both

indexes trading at a near seven-month low. The Dow Jones

Industrial Average shed 2.6%.

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.

"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 bottom out when we have

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

The CBOE Volatility index, known as Wall Street's

fear gauge, touched a three-week high at 26.91 points.

The tariffs, poised to disrupt the global trade order

and unsettle businesses, highlight 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.

The benchmark S&P 500 and the tech-heavy Nasdaq

fell 10% from their record highs last month, marking a

correction, as investors priced in the damage from tariffs on

the economy and businesses.

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 Friday's payrolls

data and Fed Chair Jerome Powell's speech, which could offer

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

future path of interest rates.

Data on Thursday

showed

the number of Americans filing new applications for

unemployment benefits fell last week, pointing to continued

labor market stability ahead of potential volatility from import

tariffs.

"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.

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

dropping 11% and Ralph Lauren ( RL ) falling 12% after Trump

imposed a raft of new tariffs on major production hubs including

Vietnam, Indonesia and China.

Big banks such as Citigroup ( C/PN ) and Bank of America Corp ( BAC )

, which are sensitive to economic risks, falling over 8%

each. JPMorgan Chase & Co ( JPM ) lost 4.5%.

The U.S. small-cap Russell 2000 index tumbled 4%,

underscoring concerns about the health of the domestic economy.

Oil stocks including Exxon Mobil ( XOM ) and Chevron

fell about 3.5% each as crude prices slumped 6%

on Trump tariffs and OPEC+ speeding up output hikes.

Declining issues outnumbered advancers by a 5.33-to-1 ratio

on the NYSE. and by a 5.79-to-1 ratio on the Nasdaq.

The S&P 500 posted 28 new 52-week highs and 50 new

lows while the Nasdaq Composite recorded 13 new

highs and 316 new lows.