Washington, DC: US stock markets experienced a significant decline, bitcoin saw a sharp drop, and the Wall Street volatility index surged to its highest point amid growing concerns over US President Donald Trump's economic policies, leading to a broad market selloff on Monday, according to CNN.
The downturn on Wall Street commenced early in the trading session, with all three major indices starting in negative territory. US stocks continued to decline throughout the day, and although there was a brief rally in the afternoon, they ultimately closed lower.
The Dow Jones Industrial Average ended the day down by 890 points, recovering from a loss that exceeded 1,100 points at one stage. The S&P 500 also fell sharply, dropping by 2.7 percent, while the Nasdaq Composite experienced a decline of 4 percent.
This marked the Nasdaq's largest single-day decrease since September 2022, and both the Dow and S&P 500 recorded their worst performance of the year.
This selloff extended a challenging month for the markets, with all three major indices erasing gains made since the US presidential election in November.
The significant market decline was primarily driven by worries about the implications of Trump's tariff policies. In a Fox News interview that aired on Sunday, Trump did not dismiss the possibility of a recession, stating that the US economy would undergo "a period of transition." When asked if he anticipated a recession this year, Trump replied, "I hate to predict things like that. There is a period of transition because what we're doing is very big."
Tech stocks were the primary drivers of the market decline, negatively impacting the S&P 500 and pushing the Nasdaq into correction territory. The S&P 500 finished down 8.6 percent from its peak on February 19. Major tech companies, including Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA), all experienced losses on Monday.
Anthony Saglimbene, chief market strategist at Ameriprise, noted that "President Trump's remarks, which did not entirely rule out the possibility of a recession, unsettled investors who were already on edge."
In a separate development, the White House announced on Monday that Donald Trump is poised to drive "historic" growth during his anticipated second term as President of the United States. White House spokesman Kush Desai stated, "Since President Trump's election, industry leaders have responded positively to his America First economic strategy, which includes tariffs, deregulation, and the promotion of American energy, resulting in trillions of dollars in investment commitments that will generate thousands of new jobs."
Desai added, "President Trump achieved remarkable job, wage, and investment growth during his first term and is expected to replicate that success in his second term."
On Monday, Tesla's stock fell by 15.4 percent. Following the US presidential election in November, Tesla shares had seen an increase. However, the stock has declined nearly 45 percent this year. Recently, the company has faced challenges due to protests against CEO Elon Musk regarding his significant involvement in the Trump administration, as well as a decrease in sales in Europe.
Nvidia's shares experienced a decline of five percent, while Palantir (PLTR), another prominent player in the artificial intelligence sector, saw a drop of ten percent. The VIX, which measures market volatility, surged to its highest point this year. Bitcoin fell to approximately USD 78,000 on Monday, marking its lowest value since November, amid a broader selloff of high-risk assets.
This month has been challenging for stocks, largely due to uncertainty surrounding Trump's tariff policies. The S&P 500 declined by 3.1 percent last week, marking its worst performance since September. Ed Yardeni, President of Yardeni Research, commented, "The stock market is losing its confidence in the Trump 2.0 policies."
Trump had previously threatened to impose tariffs on imports from Canada and Mexico, later confirming that these tariffs would take effect in April. He increased the tariff on all Chinese imports from 10 percent to 20 percent and announced a 25 percent tariff on steel and aluminum imports set to begin on March 12.
Additionally, Trump warned last week of a potential 250 percent tariff on Canadian dairy products and a significantly high tariff on lumber. In an interview with Fox News, he indicated that tariffs could "go up as time goes by."
The yield on the 10-year US Treasury bond fell to 4.225 percent as investors sought the safety of government bonds, reflecting concerns about economic uncertainty and growth. This week, investors will be closely monitoring monthly inflation data expected on Wednesday and Thursday to assess whether inflation remained persistent in February. A recession is typically defined as two consecutive quarters of negative GDP growth.
