U.S. Stock Market Tumbles as Trump’s Tariffs Worry Investors

U.S. Stock Market Tumbles as Trump’s Tariffs Worry Investors \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ The U.S. stock market suffered sharp losses on Monday, with the S&P 500 dropping 2.7%, the Dow Jones falling 890 points, and the Nasdaq plunging 4%. Investors are concerned about President Donald Trump’s aggressive tariff policies and economic strategy, which some fear could trigger a slowdown. Big Tech stocks, Tesla, and consumer-driven companies saw significant declines, while investors fled to Treasury bonds for stability. Despite the turmoil, mergers and acquisitions remain active, with Redfin and ServiceNow making billion-dollar deals.

Stock Market Sell-Off Quick Looks

• Major Indexes Plummet: S&P 500 down 2.7%, Dow drops 890 points, Nasdaq falls 4%.
• Investor Uncertainty Grows: Concerns over Trump’s tariffs, government spending cuts, and economic policies.
• Tesla Stock Crashes 15.4%: Now down 45% for 2025 amid protests and declining EV sales.
• Nvidia Falls 5.1%: The AI chip giant has now lost over 20% of its value this year.
• Bitcoin Slumps Below $80,000: Down from $106,000 in December, reflecting broader market concerns.
• Treasury Bonds Rise as Safe Haven: 10-year yield drops to 4.22% as investors seek stability.
• Redfin Surges 67.9%: Rocket acquires the real estate firm in a $1.75 billion all-stock deal.

Deep Look

Market Meltdown: Wall Street Reacts to Trump’s Tariffs and Economic Policies

The U.S. stock market faced a deepening sell-off on Monday, driven by growing investor anxiety over President Donald Trump’s economic policies, escalating tariffs, and uncertainty surrounding federal budget cuts.

The S&P 500 fell 2.7%, nearing a 9% drop from its all-time high set last month. The Dow Jones Industrial Average plunged 890 points, while the Nasdaq composite sank 4%, its worst single-day performance of the year.

At one point, the S&P 500 was down 3.6%, on track for its worst trading day since 2022, when fears of soaring inflation and a potential recession rattled markets.

The main source of concern? Trump’s unpredictable approach to trade and economic policy.

His administration has imposed on-again, off-again tariffs, leaving businesses and investors uncertain about how supply chains, corporate profits, and economic growth will be affected.

“The market is looking for direction, but Trump’s policies are creating whiplash instead,” said Chris Larkin, Managing Director at E-Trade from Morgan Stanley.

With manufacturing jobs, trade restrictions, and federal budget cuts at the center of Trump’s economic agenda, Wall Street is questioning how much economic pain he’s willing to inflict to achieve his long-term goals.

Trump’s Response: “It Takes a Little Time”

Asked whether he expects a recession in 2025, Trump told Fox News Channel on Sunday:

“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 added:

“It takes a little time. It takes a little time.”

While Trump remains optimistic, economists are revising their forecasts downward.

• Goldman Sachs’ David Mericle lowered his 2025 U.S. growth projection from 2.2% to 1.7%, citing Trump’s tariff-heavy trade policies.
• He also raised the probability of a recession to 20%, though he noted that the White House could ease policies if risks increase.

Trump’s Treasury Secretary, Scott Bessent, has suggested that the economy needs to go through a “detox period”, as it weans off government spending. However, cuts to federal jobs and increased deportations could further strain the labor market.

Biggest Market Losers: Tesla, Nvidia, and Consumer Stocks

The stock market sell-off has hit some of its biggest stars the hardest, particularly tech giants, AI stocks, and consumer-driven companies.

1. Tesla Stock Collapses: Down 15.4% Monday, 45% for 2025
Tesla’s stock plunged 15.4% on Monday, extending its 45% year-to-date decline.

• Once boosted by Musk’s close ties to Trump, Tesla is now struggling with brand damage and public backlash.
• Protests have erupted at Tesla dealerships, fueled by dissatisfaction over Trump’s government workforce cuts and other economic moves.
• Tesla’s global sales have cratered, particularly in China and Europe, leading to investor concerns about future profitability.

2. Nvidia Sinks 5.1%
After an 820% surge in 2023 and 2024, Nvidia’s stock has lost over 20% this year, raising fears that the AI bubble may be bursting.

• The AI leader has seen waning investor confidence, despite its dominance in AI chip manufacturing.
• Analysts believe Trump’s trade policies and rising competition from AMD and Intel could further impact its growth.

3. Consumer-Focused Stocks Take a Hit
Companies that depend on consumer confidence also suffered major losses:

• Carnival Cruise Line fell 7.6%, as investors worried about discretionary spending.
• United Airlines dropped 6.3%, reflecting concerns about travel demand in a slowing economy.

Bitcoin and Cryptocurrencies in Free Fall

The stock market isn’t the only asset class struggling.

• Bitcoin, which surged above $106,000 in December, has now dropped below $80,000.
• Investors are pulling money out of speculative assets, as uncertainty in the economy grows.

Treasury Bonds Surge as Investors Seek Safety

While stocks and cryptocurrencies suffered sharp declines, U.S. Treasury bonds surged as investors sought safe-haven assets.

• The 10-year Treasury yield dropped to 4.22% from 4.32%, reflecting increased demand for bonds.
• Since January 2025, the yield has fallen from 4.80%, signaling growing concerns about economic slowdown and future rate cuts.

Mergers and Acquisitions Still Active Amid Sell-Off

Despite the market downturn, corporate dealmaking remains strong:

• Redfin stock surged 67.9% after Rocket announced a $1.75 billion all-stock acquisition of the digital real estate firm.
• ServiceNow dropped 7.9% after announcing a $2.85 billion cash-and-stock acquisition of AI startup Moveworks.

Global Markets Also Struggle

The stock market sell-off wasn’t limited to the U.S..

• European indexes fell broadly, mirroring Wall Street’s decline.
• In Asia, Hong Kong’s Hang Seng Index dropped 1.8%, while Shanghai’s market fell 0.2%.
• China’s consumer prices fell for the first time in 13 months, raising concerns about weak demand in the world’s second-largest economy.

What’s Next for the Markets?

With tariffs, economic uncertainty, and Federal Reserve policy still in flux, investors are bracing for more volatility.

• If the economy continues to show signs of slowing, Trump may be forced to adjust his policies to avoid a full-blown recession.
• The Federal Reserve’s next move—whether it holds rates steady or cuts them—will be closely watched.
• For now, Wall Street remains on edge, with the market awaiting clearer signals from the White House.

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