US stock markets took a big hit on Monday, driven by worries about an economic slowdown. President Trump suggested that his tariffs could potentially trigger a recession, which added to investor fears.
The Nasdaq index fell 4.0% by the end of the day, marking its steepest drop since 2022. Other markets also suffered significant losses, especially in the tech sector. Tesla shares plummeted about 15.4%, while Nvidia, a major chipmaker, dropped over 5%. Other tech giants like Meta, Amazon, and Alphabet saw similar declines.
The S&P 500 Index decreased by 2.7%, and the Dow Jones Industrial Average was down by 2.1%. This downturn followed Trump’s remarks about the economy being in a “transition” phase. He acknowledged concerns about a recession during an interview with Fox News, stating that he hesitates to make predictions. He emphasized efforts to bring wealth back to America, referring to those changes as significant.
Even though Trump hasn’t commented further on the economy, his advisors have tried to ease public concern. A White House official noted a stark difference between the stock market’s performance and the actual conditions reported by businesses, suggesting that real business activity is more important for understanding the economy’s future.
Many economic analysts are becoming increasingly worried about slowing growth and rising prices. Last week, major US markets fell back to levels seen before Trump’s election victory in November, when investors were initially hopeful for tax cuts and reduced regulations.
Investors are anxious that Trump’s tariffs, which are taxes on imported goods, could lead to higher prices and potentially slow down the economy. Rachel Winter, an investment manager, highlighted that the tariffs would likely contribute to inflation over time.
Trump enacted these tariffs after accusing China, Mexico, and Canada of failing to tackle illegal drug and migrant issues. Those countries have, in turn, denied his claims.
Economist Mohamed El-Erian pointed out that while investors were initially excited about Trump’s deregulation and tax plans, they underestimated the risk of a trade war. The stock market’s recent decline reflects adjustments as investors react to signs of decreased spending from businesses and households, which might negatively affect economic growth.
However, some advisors, like Kevin Hassett, counter the pessimistic outlook. He urged optimism regarding the US economy and claimed that the tariffs are already bringing manufacturing jobs back to the country. Hassett acknowledged some mixed data for this quarter but attributed it to the timing of Trump’s tariffs and challenges from the previous administration.
