The Dow Jones took an 818 point tumble Wednesday — the third biggest one-day drop in history — closing the day at 25,608, according to NBC News.
It was the steepest fall since February, the outlet reported.
The S&P 500 closed 3.3 percent lower, while the tech-heavy Nasdaq tumbled by 4 percent for its worst day since Brexit. Wall Street's "fear gauge" or volatility index rose to its highest level since April.
Investors were mainly reacting to rising rates and Treasury yields, as well as a recent warning from the International Monetary Fund — essentially the world’s lender of last resort — that global economic growth was being crimped by trade tensions and a tit-for-tat over tariffs.
One market strategist said the current trade situation has helped create a “perfect storm” scenario:
“It is a perfect storm for technology right now with the tariff war with China and weaker demand for chips,” Ryan Nauman, market strategist at Informa Financial Intelligence, told Reuters.
The routing knocked $7.5 billion off the personal fortune of Amazon founder and CEO Jeff Bezos, with Warren Buffett taking a $3.5 billion hit, according to Forbes.
"Trade policy reflects politics, and politics remain unsettled in several countries, posing further risks," said Maurice Obstfeld, the IMF’s chief economist, on Tuesday, warning that the world would be a “poorer and more dangerous place” if there were a full-scale trade war between the U.S. and Beijing.
The downward trend continued Thursday, with the Dow falling “just over 100 points, paring earlier losses in premarket trading that saw the index down by over 300 points.”
Earlier, Britain's FTSE index dropped nearly 2 percent, sending it into correction territory, having lost almost 10 percent of its value since May. Asia's Nikkei index was down 4 percent, and Europe's Stoxx 600 hit its lowest level in more than 18 months.
The global sell-off was triggered by Wednesday's stock market routing, when the Dow Jones plunged by more than 800 points as investors fled to safer assets over fears that rising interest rates would lead to tighter borrowing and higher inflation.
The Federal Reserve has eschewed "accommodative" monetary policy, put into place after the Great Recession, and has raised interest rates a total of three times so far this year — moves that have irked the president.
President Donald Trump, who has long chafed at the Federal Reserve's handling of interest rates, doubled down on Wednesday, calling the Fed "crazy" and said it is "going loco." During a phone interview on the Fox News channel, Trump said the market had dropped because of the Fed and the Treasury. "The Fed is going wild. I mean, I don't know what their problem is that they are raising interest rates and it's ridiculous," Trump said.
But Trump appears to underestimate his own hand in the market volatility, as most market observers point to his ongoing trade war with China as a significant part of the mix.
The International Monetary Fund warned on Tuesday that the global economy would suffer if the trade standoff was not resolved. China has already had to pump billions of dollars into its own economy to brace against the impact of Trump's tariffs, and U.S. companies are contending with the financial impact of retaliatory tariffs. Ford announced last week that it was taking a billion-dollar hit due to tariffs and Walmart has warned that it would have to raise prices for many of its China-made products.