What went wrong with the US stock market?

All of which helped send the U.S. stock market plummeting in April 2025, with the S&P 500 shedding more than 15% of its value — the biggest drop since the COVID-19 lockdowns in 2020. This nosedive was largely catalyzed by President Donald Trump’s hard-line tariff policies, which injected pervasive uncertainty and turbulence into world markets. ​

Business Insider

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Business Insider

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Reuters

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Major Causes of the Market Crash

Aggressive Tariff Policies

April 2: President Trump declares “Liberation Day” and announces a 10% baseline tariff on all imports, plus China (34%) and the European Union (20%). That led to panic in the markets, erasing more than $3 trillion of market value in a matter of days. ​

Wikipedia, the free encyclopedia

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Wikipedia

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Wikipedia

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Global Retaliation

China retaliated with tariffs of 125 percent or more, and so have other countries like Canada and the E.U. These moves further escalated trade tensions while upending global supply lines and denting American companies and investors confidence. ​

Wikipedia

Investor Sentiment Amid Recession Fears

In a Bank of America survey, 36% of fund managers said they were underweight on U.S. equities, a notable turnaround from prior assumptions. The market is set up for global recession, reflected in a concerted shift of investment capital towards safety in bonds and cash. ​

Reuters

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MarketWatch

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MarketWatch

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Reuters

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Technical Indicators & Market Volatility

The S&P 500’s swift drop sparked a “death cross,” a technical indicator that occurs when the 50-day moving average dips below the 200-day moving average and indicates potential for more loss. This is followed by a general bearish market sentiment, with some short-term increases. ​

Reuters

Current Market Snapshot

S&P 500 ETF (SPY): $538.50, down 0.12% for today

Dow Jones ETF (DIA): $404.67 (-0.19% today)

Nasdaq ETF (QQQ)​ $458.04, up 0.12% today​

How many stock market crashes have there been in US history?

The Panic of 1837

Cause: A speculative investment crisis that causes the collapse of banks

Fallout: The stock market dropped roughly 40 percent in value, while the crash helped spark a lasting economic depression.

The Great Depression (1929)

Cause: over-speculation, banking collapses, and economic distortions.

Impact : The Dow Jones Industrial Average (DJIA) dropped nearly 90% in value, which led to mass unemployment and worldwide economic pain.

Black Monday (1987)

Cause: A perfect storm of factors: a strong dollar, rising interest rates, and automated trading programs.

Effect: The DJIA dropped 22.6%, the biggest one-day percentage plunge ever recorded in the United States.

The Dotcom Bubble (2000)

 Cause: Overvaluation of tech stocks due to speculation in internet-based companies.

Effect: NASDAQ Composite—78% peak to trough and an early 2000s recession.

Global Financial Crisis (2008)

The collapse of the housing bubble, mortgage defaults, and the failure of major financial institutions.

Impact: The S&P 500 plunged 57%, and the market took years to rebound.

COVID-19 Crash (2020)

Cause: The pandemic hit and ushered in widespread lockdowns, upended global supply chains, and gutted consumer activity.

Impact: The stock market crashed, with the S&P 500 dropping 33 percent from February to March 2020.

The 2025 Stock Market Crash (Still happening)

Cause: Spurred by trade tensions, particularly the tariffs of President Trump, and worries of an economic slowdown.

Aiba-682: The S&P's sharpest tumble in April 2025 saw it lose more than 15%—its worst performance since the COVID market crash back in 2020.

Other Notable Crashes

The 1973-1974 Recession: Caused by the oil embargo, stock markets fell close to 50%.

The Flash Crash of 2010: A 9% drop in minutes due to automated trading algorithms.

Conclusion:

The U.S. stock market has experienced multiple crashes caused by multiple economic, geopolitical, and market-driven factors. These crashes are usually characterized by sudden drops in market indices like the S&P 500 or the Dow Jones Industrial Average. Each crash has had its own unique causes, but the crashes tend to trigger longer-term economic and financial changes.

What are the reasons for the decline in the US stock market?

In April 2025, one of the main reasons for the fall of the U.S. stock market was a multitude of reasons, which in turn led to investors being anxious and an overall economic slowdown. Here are the main reasons for the current stock market decline:

Aggressive Tariff Policies

Cause: President Trump has implemented aggressive tariffs, such as those targeting China and the European Union, and added a 10% baseline tariff on all imported goods.

Impact: These policies have led to trade tensions and retaliation from other countries, affecting global trade and supply chains, harming U.S. firms that depend upon international markets for business; investor confidence has been shaken by this trade uncertainty and is adding to the stock market’s plunge. (businessinsider.com)

Economic Slowdown Concerns

Cause: The tariffs and trade disruptions are fueling worries of a global recession. Soaring inflation and mounting costs to businesses are leading to increasing uncertainty over economic growth.

Impact: While investors may be rattled by a slowdown in consumer spending, lower corporate earnings and higher operational costs Those fears have prompted many investors to pull back from equities and contributed to the decline. (reuters.com)

Rising Interest Rates

Cause: The Federal Reserve has been slowly increasing interest rates to fight inflation and the economy. Although higher rates can curb inflation, they also make borrowing more expensive for businesses and consumers alike.

Impact: Interest rates are higher, which makes fixed-income investments (like bonds) more appealing than stocks. So investors might sell stocks to buy safer assets, which is weighing down the markets. (businessinsider.com)

Geopolitical Tensions

Effect: Geopolitical tensions look as likely as ever to stymie potential global growth, especially the trade war between the United States and China, hostilities between the United States and Iran, and the risk of further Russian aggression, to name a few.

Impact: Geopolitical risks usually cause volatility in the world markets. Investors worry that these risks could get worse, potentially threatening global economic stability and causing markets to fall. (theguardian.com)

Earnings Disappointment for Corporations

Cause: Several large corporations have reported lackluster earnings, as many have battled with rising input costs amid inflation and trade disruptions.

Impact: Weak earnings reports sap investor confidence, suggesting that businesses are not performing well, which leads to declines in stock prices. (businessinsider.com)

Technical Factors (Market Sentiment)

Cause: A stock market “death cross,” in which the short-term moving average falls beneath the long-term moving average. This is a technical indicator usually associated with downtrends in the market.

Impact: Some investors have reacted by dumping their positions out of fear that losses will deepen. And technical indicators are known to have a powerful psychological effect on investors and can magnify market declines. (reuters.com)

Summary:

The decline in the U.S. stock market is being fueled by a mix of harsh tariff policies, climbing rates of interest, international tensions, corporate earnings letdowns, and broader fears concerning the stability of the economy and the prospects for recession. All of these have collectively eroded investor confidence in the market, leading to large sell-offs in major stock indices such as the Dow Jones and the S&P 500.