A three-week market sell-off worsened on Monday as concerns over the economic impact of President Donald Trump’s tariff policies rattled investors.
The latest decline came after Trump, in a Fox News interview over the weekend, refused to rule out the possibility of a recession, further fueling uncertainty.
“There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America,” Trump said on Sunday Morning Futures, suggesting that the economic turbulence was a necessary adjustment phase.
The ongoing trade tensions with Mexico, Canada, and China have contributed to mounting fears that the US economy could slow down significantly.
Investors are bracing for a crucial week ahead, with several key economic reports due to be released, including consumer and producer price inflation data, consumer sentiment readings, and inflation expectations.
These indicators could provide further insight into the state of the economy and whether inflationary pressures are beginning to ease.
Volatility on Wall Street increased to its highest level since December on Monday, with investors evaluating the impact of tariffs on the US economy.
The CBOE Volatility Index (VIX) rose over 24% to 29.03, marking its highest point since August 2024.
Nasdaq, S&P, Dow Jones all in red
Stocks plunged across the board, with the Dow Jones Industrial Average dropping 1,037 points, or 2.4%, in what marked its worst single-day decline of the year. The S&P 500 fell 2.8%, hitting its lowest level since September.
The Nasdaq Composite experienced the sharpest drop, tumbling close to 5% as investors rushed to offload high-growth technology stocks.
If losses hold, the Nasdaq is on track for its worst one-day decline since September 2022, when it fell more than 5%.
The major indices have now entered correction territory.
The S&P 500 is down 9.1% from its all-time high reached in February, while the Nasdaq has fallen 14% from its recent peak.
The Russell 2000, a key gauge of small-cap stocks, has lost 18% from its high, moving closer to bear market levels.
Technology stocks lead the declines
High-growth technology stocks, which had fueled much of the recent bull market, suffered some of the steepest losses.
Tesla plunged 13%, heading for its worst trading day since 2020. Alphabet, Meta, and Nvidia each declined by around 5%, while Palantir, another favorite among retail traders, dropped more than 10%.
Among the biggest losers in the Nasdaq 100, MicroStrategy saw its stock price collapse more than 17%, making it the worst performer in the index.
Tesla followed closely, with a decline of more than 14%.
With the Federal Reserve still maintaining a cautious stance on interest rates and economic uncertainty rising, investor sentiment remains fragile.
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