The Dow Jones dropped over 1,000 points, marking one of the worst trading days in years as uncertainty over Trump’s tariff policies and economic slowdown weigh on markets.
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The US stock market experienced a sharp sell-off on Monday, with Wall Street facing one of its worst days in years as mounting economic concerns and uncertainty over President Donald Trump's trade policies weighed heavily on investor confidence.
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The S&P 500 dropped 3.2% in afternoon trading, setting it up for its steepest decline since 2022, when soaring inflation severely strained household budgets. The Dow Jones Industrial Average plummeted by 1,042 points, or 2.4%, with just over an hour left in the trading session. Meanwhile, the Nasdaq composite tumbled 4.6%, reflecting a particularly rough day for tech stocks.
According to AP, the S&P 500 is now down 9.1% from its record high set on February 19. The market’s latest drop comes amid heightened volatility, with the index swinging by more than 1% — either up or down — in seven of the past eight sessions. The turbulence stems largely from Trump’s inconsistent tariff policies, which have left businesses and investors uncertain about the future. The fear is that these sharp market fluctuations could either directly weaken the economy or trigger enough uncertainty to stall corporate investment and consumer spending.
Signs of economic fragility are already emerging. Surveys have shown increased pessimism among businesses and consumers, and real-time indicators compiled by the Federal Reserve Bank of Atlanta suggest that the US economy may already be contracting.
When asked over the weekend if he anticipated a recession in 2025, Trump told Fox News, "I hate to predict things like that. There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing. It takes a little time. It takes a little time."
Trump has justified his tariff strategy as a means of encouraging the return of manufacturing jobs to the US. Treasury Secretary Scott Bessent acknowledged that the economy might go through a "detox" phase as it adjusts to less government-driven spending.
Despite the market turmoil, the US job market remains stable for now, and the economy ended last year on solid footing. However, economists are scaling back their growth projections for 2025. David Mericle of Goldman Sachs recently lowered his forecast for US economic growth to 1.7% from 2.2%, citing larger-than-expected tariffs as the key factor. He also increased the probability of a recession over the next year to one-in-five, noting that the White House retains the option to ease policy changes if economic risks become more pronounced.
"There are always multiple forces at work in the market, but right now, almost all of them are taking a back seat to tariffs," said Chris Larkin, managing director for trading and investing at E-Trade from Morgan Stanley.
Big Tech stocks, which have powered much of the market’s recent strength, took some of the hardest hits. Nvidia sank 5.9%, bringing its total loss for the year to 21%. This marks a stark reversal from its meteoric rise of nearly 820% over 2023 and 2024.
Tesla plunged 15.1% on Monday, deepening its year-to-date decline to nearly 45%. While the stock initially surged after Trump’s re-election on hopes that Elon Musk’s close ties with the administration would benefit the electric vehicle maker, it has since fallen sharply amid growing concerns over the brand’s political and public image. Protests over US government job cuts and other policy moves have even targeted Tesla dealerships.
Consumer-driven stocks also stumbled. United Airlines fell 8.4%, while Carnival, the cruise ship operator, lost 9.2%.
Other asset classes also reflected investor unease. Bitcoin’s value slid below $78,000 after peaking at over $106,000 in December, reflecting broader caution in the market.
Treasury bonds, on the other hand, saw increased demand as investors sought safer assets. The yield on the 10-year Treasury fell to 4.21% from 4.32% on Friday, continuing a downward trend from January’s high of nearly 4.80%. Lower yields reflect rising demand for bonds, as investors brace for further economic uncertainty.
Despite the turmoil, dealmaking on Wall Street remains active. Shares of Redfin soared 64.7% after Rocket Companies announced plans to acquire the digital real estate brokerage in an all-stock deal valued at $1.75 billion. Rocket’s stock, however, fell 17.2% following the announcement.
ServiceNow fell 7.9% after the AI platform company revealed plans to acquire AI-assistant maker Moveworks for $2.85 billion in cash and stock.
European markets also suffered, with major indexes falling after a mixed session in Asia. Hong Kong’s market declined 1.8%, while Shanghai slipped 0.2% following data showing that China’s consumer prices fell in February for the first time in 13 months, pointing to weakness in the world’s second-largest economy.
As per AP reports, the early timing of the Lunar New Year holiday added to the downward pressure on China’s economy.
Investors remain on edge as markets grapple with the uncertain fallout from Trump’s trade policies and broader economic headwinds. The coming months are likely to remain volatile as Wall Street adjusts to shifting economic and political realities.
(With inputs from AP)
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