The US stock market’s sell-off got even worse on Monday, and it was on track for its worst day in years as Wall Street questioned how much pain President Donald Trump would let the US economy endure in order to get what he wanted.
The S&P 500 was down 3.2 per cent in Monday afternoon trading, which would be its sharpest drop since the highest inflation in generations was shredding budgets in 2022.
The Dow Jones Industrial Average was down 1,042 points, or 2.4 per cent, with just over an hour remaining in trading, and the Nasdaq composite was 4.6 per cent lower.
An Associated Press report via Press Trust of India said that the main measure of the US stock market was on track for a seventh swing of more than 1 per cent, up or down, in the past eight days, following a scary stretch dominated by Trump’s on -and- off -again tariffs.
The worry is that the whipsaw moves by the Trump Administration will either hurt the US economy directly or create enough uncertainty to drive US companies and consumers into an economy-freezing paralysis. The S&P 500 was down 9.1 per cent from its all-time high set on February 19.
The economy has already given some signals of weakening, mostly through surveys showing increased pessimism. And a widely followed collection of real-time indicators compiled by the Federal Reserve Bank of Atlanta suggests that the US economy may already be shrinking.
Asked over the weekend whether he was expecting a recession in 2025, Trump told Fox News Channel: “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.” He then added, “It takes a little time. It takes a little time.”
Trump says he wants to bring manufacturing jobs back to the United States, among other reasons he has given for tariffs. Treasury Secretary Scott Bessent has also said that the economy may go through a “detox” period as it weans off an addiction to spending by the government.
US economists are marking down performance forecasts
The US job market is still showing stable hiring at the moment, to be sure, and the economy ended last year running at a solid rate. But economists are marking down their forecasts for how the economy will perform this year.
At Goldman Sachs, for example, David Mericle cut his estimate for US economic growth to 1.7 per cent from 2.2 per cent for the end of 2025 over the year before, largely because tariffs look like they will be bigger than he was previously forecasting.
He sees a 1-in-5 chance of a recession over the next year, raising it only slightly because “the White House has the option to pull back policy changes” if the risks to the economy “begin to look more serious”.
“There are always multiple forces at work in the market, but right now, almost all of them are taking a back seat to tariffs,” according to Chris Larkin, Managing Director, trading and investing, at E-Trade from Morgan Stanley.
The worries hitting Wall Street have so far been hurting some of its biggest stars the most. Big Tech stocks and companies that rode the Artificial Intelligence frenzy in recent years have slumped sharply.
Nvidia fell another 5.9 per cent on Monday to bring its loss for the year so far to 21 per cent. This is a steep drop-off from its surge of nearly 820 per cent over 2023 and 2024.
Elon Musk’s Tesla fell 15.1 per cent to deepen its loss for 2025 to nearly 45 per cent. After getting an initial post-election bump on hopes that Musk’s close relationship with Trump would help the electric-vehicle company, the stock has since slumped on worries that its brand has become intertwined with Musk.
Protests against the US government’s efforts to cull its workforce and other moves have targeted Tesla dealerships, for example.
Stocks of companies that depend on US households feeling good enough about their finances to spend also tumbled sharply. United Airlines lost 8.4 per cent, and cruise-ship operator Carnival fell 9.2 per cent.
Bitcoin value drops below USD 78K from USD 106K
It is not just stocks struggling. Investors are sending prices lower for all kinds of investments whose momentum had earlier seemed nearly impossible to stop at times, such as Bitcoin. The cryptocurrency’s value has dropped below USD 78,000 from more than USD 106,000 in December.
Instead, investors have been bidding up US Treasury bonds as they look for things whose prices can hold up better when the economy is under pressure. That has sent prices for Treasurys sharply higher, which in turn has sent down their yields.
The yield on the 10-year Treasury tumbled again to 4.21 per cent from 4.32 per cent late on Friday. It has been dropping since January, when it was approaching 4.8 per cent, as worries about the economy have grown. That is a major move for the bond market.
In stock markets abroad, European indexes largely fell following a mixed session in Asia. Indexes fell 1.8 per cent in Hong Kong and 0.2 per cent in Shanghai after China said that consumer prices fell in February for the first time in 13 months.
It is the latest signal of weakness for the world’s second-largest economy, as persistent weak demand was compounded by the early timing of the Lunar New Year holiday.
