Top US stocks crash as inflation shock and tariff war fuel Wall Street’s worst day in months

Wall Street faced one of its most turbulent sessions in months on April 8, 2025, as a wave of selling dragged major US stocks across biotech, semiconductors, clean energy, and e-commerce sectors into double-digit losses. The decline followed a higher-than-expected inflation print that rattled investor confidence and raised the likelihood that the US Federal Reserve will maintain elevated interest rates for a longer period than previously anticipated. Simultaneously, a renewed trade standoff between the United States and China—including fresh tariffs and technology export restrictions—amplified market concerns over supply chain disruptions and global growth risks.

A broad range of stocks took a hit, with Soleno Therapeutics, Inc., GDS Holdings Limited, V.F. Corporation, Albemarle Corporation, and Tempus AI, Inc. among the hardest hit. The list of top losers also included leading names in AI, autonomous vehicles, housing, consumer goods, and energy. The convergence of monetary policy uncertainty, geopolitical conflict, and sector-specific pressures triggered a sharp market-wide repricing.

What triggered the steep losses in biotech and health innovation stocks?

The most significant decline of the day came from Soleno Therapeutics, Inc., whose stock plummeted 15.22% to $59.04. Soleno, which develops treatments for rare diseases, had previously enjoyed a surge in investor interest, buoyed by optimism in the biotech space and a more risk-tolerant equity environment. However, the abrupt shift in market sentiment has cast a shadow over early-stage biotech firms that rely on external capital to fund clinical programs. With rate cuts now looking increasingly distant, investors are reevaluating speculative holdings, particularly in companies with no near-term path to profitability.

Tempus AI, Inc., a health tech company focused on applying artificial intelligence to clinical diagnostics and patient data, declined 12.81% to $37.23. Despite being part of a broader narrative around AI transforming healthcare, the company has become increasingly vulnerable to valuation resets. As capital becomes more expensive, even firms operating at the intersection of two growth megatrends—AI and healthcare—are not immune from market rotation away from high-beta assets.

How are rising US-China tensions and trade tariffs affecting Chinese stocks?

The sharp losses extended to Chinese companies listed on US exchanges, where investor sentiment took a decisive turn for the worse following the latest developments in the ongoing US-China trade dispute. The Biden administration’s decision to extend and broaden tariffs on Chinese imports—particularly AI hardware, green tech components, and critical minerals—revived fears of a long-drawn economic confrontation.

GDS Holdings Limited, which provides cloud and data center services in China, fell 14.34% to $17.68 as investors reassessed the risks tied to US export restrictions targeting Chinese firms handling sensitive data infrastructure. WeRide Inc., focused on autonomous vehicle technology, dropped 13.08%, while Pony AI Inc. lost 11.77%—both viewed as vulnerable to future sanctions or investment bans amid growing scrutiny of Chinese AI firms with ties to surveillance systems.

The education sector also came under pressure. TAL Education Group dropped 10.60%, extending a volatile run for Chinese edtech names amid ongoing restrictions within China and the threat of delisting pressure abroad. Although New Oriental Education & Technology Group ended the day flat, volume was subdued, suggesting waning investor conviction across the board.

Why did lithium and clean energy stocks decline so sharply?

Companies tied to the electric vehicle and renewable energy supply chains also fell sharply, led by Albemarle Corporation and Sociedad Química y Minera de Chile S.A. (SQM). Albemarle, one of the world’s largest lithium producers, dropped 12.63% to $50.76, while SQM declined 8.98% to $31.61. These losses were driven by both falling lithium spot prices and fears that US tariff measures targeting Chinese EV components could ignite retaliation and disrupt global lithium trade.

With EV sales showing signs of slowing in major markets like Europe and China, and battery inventories rising, sentiment toward lithium producers has weakened substantially since late 2024. Despite long-term optimism around electrification, the near-term outlook remains volatile as producers grapple with price volatility, oversupply concerns, and policy-driven demand fluctuations.

Clean energy stocks, which had previously benefited from generous tax incentives and ESG inflows, also felt the pressure of rising interest rates. Enphase Energy, Inc., a solar energy tech company, dropped 11.19% to $49.52, as investors feared that elevated financing costs would delay or cancel residential and commercial solar installations.

How did retail and housing-linked stocks perform amid macro pressures?

The consumer discretionary sector also suffered, with notable names like V.F. Corporation plunging 13.50% to $9.74. The parent company of brands such as Vans and The North Face is contending with softening consumer demand and restructuring challenges, which have weighed on margins and investor sentiment.

Wayfair Inc., another high-profile decliner, fell 12.03% to $24.14. The company continues to face challenges from reduced discretionary spending and increased competition in the home furnishing space. RH (formerly Restoration Hardware) declined 9.19% to $149.36 as higher interest rates and economic uncertainty appear to be curbing demand for luxury goods.

In housing and lending, Rocket Companies, Inc. lost 10.03% and Mr. Cooper Group Inc. dropped 9.75%, reflecting tightening affordability conditions and weakening mortgage application volumes. Even as housing inventory constraints persist, rising borrowing costs are keeping many potential buyers sidelined, affecting both originations and servicing businesses.

Are semiconductors and AI stocks entering a valuation reset?

AI and semiconductor-related stocks were not spared from the April 8 decline. Strategy Incorporated (MicroStrategy) fell 11.26% to $237.95, as volatile Bitcoin movements and elevated leverage contributed to increased risk-off sentiment. Despite strong gains in the past 12 months, investors are beginning to question whether high exposure to crypto assets and AI themes can justify current valuations.

Meanwhile, Allegro MicroSystems, Inc. dropped 10.11%, Qorvo, Inc. declined 9.90%, and ON Semiconductor Corporation lost 8.92%, with analysts citing potential oversupply in analog and automotive semiconductor markets. Trade tensions have also contributed to investor wariness, especially with the US preparing further restrictions on advanced chip exports to China.

What is the broader macroeconomic backdrop behind the April 8 selloff?

The key trigger for the selloff was the March Producer Price Index (PPI) report, which showed a 0.5% month-over-month increase, surprising markets and signaling that core inflation remains stubborn. The data undermined expectations that the US Federal Reserve would begin cutting interest rates by mid-year. With inflation stickier than anticipated and recent labor market data still robust, policymakers are likely to remain cautious.

Yields on US Treasuries spiked following the report, and rate-sensitive sectors quickly followed suit in the equity market. Investors now anticipate the Fed may not begin easing until the final quarter of 2025, if at all—a sharp turnaround from the three cuts previously priced in at the start of the year.

Adding to the uncertainty are the expanding US-China trade tensions, which are creating additional inflationary risk by disrupting supply chains and raising costs for imported goods. The impact of tariffs could be significant for industries reliant on components or manufacturing partnerships in Asia, especially in semiconductors, clean tech, and consumer electronics.

While major indices like the S&P 500 and Nasdaq remain positive for the year, the session on April 8 revealed growing vulnerability among previously high-flying growth names. The market’s reliance on a narrow group of outperformers is beginning to show cracks as macroeconomic headwinds, geopolitical tensions, and sectoral rotation force a broader reassessment of equity valuations. Investors are now closely watching upcoming Consumer Price Index (CPI) data and the Federal Open Market Committee (FOMC) meeting minutes for further clues on the central bank’s next move—and whether this correction is a temporary shakeout or the beginning of a longer-term repricing.