Wall Street fears escalate as market volatility grows amid uncertainty over Trump's tariff strategy
On Monday, Wall Street experienced a sharp sell-off driven by mounting concerns about how far US President Donald Trump might push economic pressures linked to tariffs and related policies.
The S&P 500 fell 2.7 percent, nearing a 9 percent decline from its record high set just last month, according to BNN Bloomberg.
During Monday’s trading, the index sank as much as 3.6 percent, marking its steepest intraday drop since 2022, when historically high inflation had sparked recession fears that eventually did not materialize.
Monday’s session was particularly turbulent. The Dow Jones Industrial Average dropped by 890 points or 2.1 percent, recovering slightly from an earlier loss exceeding 1,100 points. Meanwhile, the Nasdaq composite saw a 4 percent decline.
This volatility was part of a worrying period in which the S&P 500 has seen swings exceeding 1 percent in seven of the past eight trading sessions, directly linked to Trump’s fluctuating tariff policies.
According to Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley, “There are always multiple forces at work in the market, but right now, almost all of them are taking a back seat to tariffs.”
The concern among investors is that these rapid market swings could either directly harm the economy or lead to a standstill due to uncertainty, impacting both companies and consumers.
Economic signals are already indicating some weakening, reflected notably through survey data showing increased pessimism.
Additionally, real-time indicators monitored by the Federal Reserve Bank of Atlanta suggest that the US economy might currently be contracting.
Over the weekend, when asked by Fox News Channel if he anticipated a recession in 2025, Trump responded, “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,” further adding, “It takes a little time. It takes a little time.” Trump has articulated his goal to restore manufacturing jobs to the United States as a reason behind the tariffs.
Trump’s Treasury secretary, Scott Bessent, has also suggested the economy could experience a “detox” as it reduces its reliance on government expenditure.
At the same time, the White House's attempts to limit federal spending, reduce the federal workforce, and increase deportations could adversely affect the job market.
Although the US job market continues to show stable hiring, economists are revising their economic growth forecasts downward.
Goldman Sachs economist David Mericle reduced his US growth forecast for late 2025 from 2.2 percent to 1.7 percent, citing larger-than-anticipated tariffs.
He currently estimates a one-in-five chance of a recession within the next year, only slightly elevated because the White House has the flexibility to reverse policy changes if economic risks intensify.
Responding to market declines, White House spokesperson Kush Desai stated that several companies have committed “trillions in investment commitments that will create thousands of jobs,” following Trump’s “America First” economic agenda.
Trump himself met privately with tech industry CEOs Monday without media coverage and made no public remarks about the market downturn during the day.
Tech companies, previously major market drivers thanks to artificial intelligence enthusiasm, experienced significant declines.
Nvidia fell another 5.1 percent on Monday, extending its year-to-date losses to more than 20 percent—a stark contrast to its approximately 820 percent gain between 2023 and 2024.
Similarly, Tesla, led by Elon Musk, dropped 15.4 percent, amplifying its 2025 losses to 45 percent amid concerns about Musk’s brand intertwining and protests targeting Tesla dealerships linked to US government policies.
Consumer-dependent stocks were also notably impacted. Carnival, the cruise-ship operator, declined 7.6 percent, while United Airlines dropped by 6.3 percent.
Investors have also shifted away from assets previously thought unstoppable, including bitcoin, which fell below US$80,000 from December’s peak exceeding US$106,000.
Conversely, investors flocked to US Treasury bonds for stability, driving bond prices upward and pushing yields lower. The 10-year Treasury yield dropped significantly to 4.22 percent from Friday's 4.32 percent, marking a substantial decline from January's near 4.80 percent.
Despite market uncertainties, deal-making continued. Digital real estate brokerage Redfin surged 67.9 percent following news of Rocket’s agreement to acquire it in an all-stock deal worth US$1.75bn.
Conversely, Rocket's own stock declined by 15.3 percent. Additionally, ServiceNow’s shares fell by 7.9 percent after announcing its acquisition of AI-assistant maker Moveworks for US$2.85bn in combined cash and stock.
In global markets, European indexes declined broadly following mixed performances in Asia.
Specifically, Hong Kong’s market fell 1.8 percent and Shanghai's dipped 0.2 percent after China announced its consumer prices declined in February—the first drop in 13 months.
The decrease indicates ongoing economic challenges driven by persistently weak demand and the earlier-than-usual Lunar New Year holiday timing.
At market close, the S&P 500 stood at 5,614.56, losing 155.64 points. The Dow Jones Industrial Average ended at 41,911.71, down 890.01 points, while the Nasdaq composite closed at 17,468.32, decreasing by 727.90 points.
