The U.S. stock market experienced a significant decline on Monday, leading to concerns on Wall Street about the economic impact of President Donald Trump’s trade policies. The S&P 500 fell by 2.7%, bringing it close to 9% below its recent all-time high. The Dow Jones Industrial Average dropped by 2.1%, with the Nasdaq composite seeing a 4% decrease.
This downward trend is attributed to uncertainty surrounding Trump’s tariffs, causing the market to swing dramatically. There are fears that these fluctuations could harm the economy or create enough instability to freeze economic activity. Recent indicators suggest a potential economic downturn, with surveys showing increased pessimism and real-time data hinting at a possible contraction.
Despite assurances from Trump about bringing wealth back to America through manufacturing jobs and Treasury Secretary Scott Bessent’s reference to an economic “detox” period, concerns remain about the impact of ongoing policy changes. Economists are revising their growth forecasts downward, with some predicting a one-in-five chance of a recession within the next year.
Market analysts emphasize that tariffs are currently a dominant factor overshadowing other market forces. The White House has defended its economic agenda, pointing to investment commitments and job creation resulting from its initiatives. However, the market volatility has particularly affected tech industry leaders and companies associated with artificial intelligence.
In response to the market turmoil, the White House highlighted positive outcomes from its economic policies, including significant investment commitments. Trump recently met with tech industry CEOs to discuss economic issues, although the meeting was not open to the media.
Stocks have taken a significant hit recently. Nvidia plunged another 5.1% on Monday, bringing its loss for the year to over 20%. This marks a stark contrast from its impressive 820% surge in 2023 and 2024. Tesla, led by Elon Musk, also saw a sharp decline of 15.4%, widening its 2025 loss to 45%. Initially buoyed by hopes of benefiting from Musk’s relationship with Trump post-election, concerns about the company’s association with Musk have since weighed down the stock. Protests against government actions have targeted Tesla dealerships, further impacting its performance.
Companies reliant on consumer spending also suffered losses, with Carnival and United Airlines dropping 7.6% and 6.3% respectively. The downward trend is not limited to stocks, as various investments, including bitcoin, have also seen prices plummet. Investors are turning to U.S. Treasury bonds for stability amid economic uncertainties, leading to a surge in bond prices and subsequent decline in yields.
Amidst this volatility, dealmaking on Wall Street continues. Rocket’s acquisition of Redfin boosted the latter’s stock by 67.9%, while Rocket’s stock dipped 15.3%. ServiceNow experienced a 7.9% drop after announcing the acquisition of Moveworks for $2.85 billion.
Major indices reflected the market turbulence, with the S&P 500, Dow Jones Industrial Average, and Nasdaq composite all posting significant losses. In global markets, European indexes fell after a mixed session in Asia. Hong Kong and Shanghai indexes dropped following reports of falling consumer prices in China, indicating economic challenges in the second-largest economy.
Overall, uncertainty looms in financial markets, but deal activities persist amidst the downturn.
