The stock market downturn has continued into a new week as recent losses are again attributed to remarks from President Donald Trump. His fluctuating and broad tariff strategies have shaken investor confidence, leading to early signs of a potential recession.
Key Facts
All three primary U.S. stock indexes experienced notable declines on Monday, wiping out the gains from Friday’s late-session rally. The Dow Jones Industrial Average fell by 2.1%, or 890 points, while the S&P 500 decreased by 2.7%, and the Nasdaq Composite plummeted by 4%. The S&P and Nasdaq closed at their lowest points since mid-September, with the Dow also reaching its lowest price since that time. Notably, it marked the Nasdaq’s worst daily performance since September 2022. The selloff was driven by Trump’s interview on Fox News’ “Sunday Morning Futures,” during which he suggested that a recession might be plausible, spoke of an economic “transition,” and remarked, “you can’t really watch the stock market.” According to Sevens Report founder Tom Essaye, these comments have “weighed on sentiment” and did little to allay investor fears about ongoing policy instability.
Nasdaq Enters Correction
While Trump may encourage sidelining attention to short-term stock fluctuations, the losses are substantial. The Nasdaq has entered correction territory, experiencing a 13% drop from its closing mark on February 19, when the market began its notable decline. Meanwhile, the S&P has decreased by 9%, and the Dow has fallen by 6%, equating to a loss of roughly 2,700 points. The S&P is emerging from its steepest week since September, down by 3.1%.
Big Tech Takes the Brunt
Throughout this aggressive three-week decline, major technology companies have been the hardest hit. Notably, Nvidia, a leader in artificial intelligence chip production, and Tesla, the electric vehicle manufacturer headed by Elon Musk, saw significant losses, with Nvidia shares falling 5% on Monday (now down 23% since February 19) and Tesla dropping 14% (a 37% decline over that timeframe). Other tech giants such as Apple, Alphabet (Google’s parent company), and Meta (Facebook’s parent company) saw their shares tumble by around 5% as investors sought safer alternatives.
Big Number
20%. This figure reflects the decline of the “magnificent seven” group of prominent American tech firms—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—since their peak in December, as reported by Bloomberg.
Reasons Behind the Stock Slide
The recent downturn aligns with Trump’s imposition of tariffs, which are generally unfavorable for stock performance due to their potential to erode corporate profit margins and weaken consumer demand. Moreover, beyond the direct adverse impact of tariffs, uncertainty regarding the timing and specific goods affected by the tariffs has contributed to a negative market outlook. “The reason stocks are dropping is the spike in uncertainty and fear that it could lead to various negative outcomes,” Essaye articulated. The rising concerns about the U.S. possibly slipping into recession have become increasingly prevalent, with Goldman Sachs economists recently raising their recession probability forecast from 15% to 20% for the next year, attributing the increase to trade policy volatility.
Contrasting Views
Morgan Stanley strategists, led by Michael Wilson, are keeping their optimistic S&P price target of 6,500 by the end of 2025 in place, forecasting a 16% rise from Monday’s approximate figure of 5,610. They suggest that Trump’s policies will initially have a growth-restrictive impact before the market benefits from lower interest rates and more supportive corporate policies later in the year.
Crucial Quote
“This is a headline-driven market, one that could shift dramatically in a short period. Hang tight and prepare for volatility,” noted Gina Bolvin, president of Bolvin Wealth Management Group, in a recent email comment.
