U.S. stocks plummeted further around midday after Federal Reserve Chairman Jerome Powell said he expected tariffs will increase inflation and slow the economy, but the central bank would keep rates steady until it can get more clarity on what the full effects of the tariffs might be.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said in prepared remarks to journalists in Virginia. “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”

He noted “the size and duration of these effects remain uncertain.”

The remarks came shortly after Trump called on Powell to “stop playing politics” and cut interest rates because inflation is down. In February, annual inflation rose 2.8%, down from January’s 3% but above the Fed’s 2% target.

Around 12:31 p.m. ET, the Dow slid 3.93%, or 1,594.43 points, to 38,951.50; the broad S&P 500 dropped 4.83%, or 260.45 points, to 5,136.07; and the tech-laden Nasdaq tumbled 4.97%, or 821.81 points, to 15,728.80. The Nasdaq’s drop puts the index into a bear market if the index holds these losses to the close of trading. A bear market is defined as 20% down from its closing peak, and that level on the Nasdaq is 16,139.11, according to Dow Jones Market Data.

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Overnight, China’s commerce ministry said the country will impose a 34% tax on all U.S. products, matching President Donald Trump’s levy on Chinese goods coming into the U.S. China’s retailiatory tariff is effective April 10.

Companies with large exposure to China like iPhone maker Apple slumped. Apple was down 5.12%. China accounts for around 80% of Apple’s production capacity with about 90% of iPhones assembled in the country, according to estimates from Evercore ISI.

Retaliation raises the odds Trump’s aggressive tariff plan will spark a full-blown trade war, reignite inflation and slow the economy. Other countries around the world have promised retaliatory tariffs, too. JP Morgan now sees a 60% chance of a U.S. recession this year.

Minor comfort came from a better-than-expected March jobs report before the market opened. Nonfarm payrolls increased 228,000, up from the revised 117,000 in February and better than the Dow Jones estimate for 140,000, according to the Bureau of Labor Statistics. The unemployment rate, though, inched up to 4.2%, just above forecasts for 4.1% and the highest since November 2021. The labor force participation rate increased, but wage growth dipped.

“The market needed today’s number. Everyone knows that economic weakness is coming, but at least we can be reassured that the labor market was robust coming into this policy-driven shock and therefore, the slowdown should not be overly steep,” said Seema Shah, chief global strategist at Principal Asset Management.

Secretary of State Marco Rubio also said Friday he was confident markets would adjust to tariffs and rebound.

The benchmark 10-year yield fell to 3.927% as investors fled to safer assets. As Treasury prices rise, yields drop.

Oil prices fell to the lowest level since 2021 as investors feared a recession would dampen demand. At the same time, the Organization of the Petroleum Exporting Countries and its allies said they’ll increase oil production beginning next month.

Friday’s losses come on the heels of Thursday’s nosedive, and all three major indexes are on pace for weekly losses. The stock market shed on Thursday the most market value in a day since March 2020, the start of the Covid-19 pandemic, after Trump revealed late Wednesday his tariff plan. He announced sweeping 10% tariffs on all countries, effective April 5, and even higher reciprocal tariffs on a list of other countries. The high reciprocal tariffs caught investors, who thought perhaps Trump was bluffing, off guard. In the days leading up to Trump’s announcement stocks had risen.

The S&P 500 and Nasdaq indexes on Thursday posted their worst day since 2020. They’re also on track for their worst week since September 2024 and their sixth week in the red out of the last seven. The S&P 500 is in a correction, defined as at least 10% below its record high.

“It is still early in the year and there is time for cooler heads to prevail and for much of the benefits of deregulation and tax cuts to improve investor sentiment, however, in the short run it seems as if everyone’s worse fears have been realized,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management.

With the average global tariff at approximately 18%, U.S. economic growth will slow to around 1% for the next several quarters, with inflation rising back to 5%, estimated Mark Dowding, BlueBay chief investment officer at RBC Global Asset Management.

“However, if the government announces trade deals to justify reversing most of the tariffs relatively quickly, continued expansion in 2025 would be more likely than recession,” said Bill Adams, chief economist at Comerica Bank. If that happens, Adams pegged a one in three chance of a recession over the next 12 months.

Trump said on Friday Vietnam leader To Lam wants to cut Vietnam’s tariffs down “to ZERO if they are able to make an agreement with the U.S.” News of the call pushed Nike shares up more than 5%. Nike makes much of their athletic gear in Vietnam.

“While there is short-term hysteria around tariffs, the hope may be that this will give way to medium-term acceptance,” Dowding said. “However, the long-term outlook remains extremely unclear.”

Corporate news

• Uncertainty and volatility in the markers forced ticketing marketplace StubHub and payments platform Klarna to delay its IPO plans, according to the WSJ.
• Amazon and Applovin are among potential buyers of TikTok outside China. The Trump administration’s deadline for the future of the social-media platform is Saturday.
• Nissan reversed an earlier decision to cut production at a Tennesee plant to one shift from two. It said it would keep both shifts now to shore up local production in the U.S. since tariffs will affect cars imported from Mexico and Japan.
• Stellantis, maker of Jeep, Dodge and Chrysler branded vehicles, got an S&P credit downgrade. The car maker on Thursday said it would paused some production in Mexico and Canada and temporarily laid off about 900 workers due to tariffs.

Cryptocurrency

After Bitcoin posted its worst first-quarter performance since the first three months of 2018, according to Dow Jones Market Data, the digital currency’s starting the next three months on rocky ground, too.

The digital unit was last down 0.27% at $83,008.41 amid the tariff uncertainty.

This story has been updated with new information

Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.