Investors’ concerns about the impact of President Donald Trump’s tariff policy on economic growth exacerbated a three-week-old market decline that worsened Monday.
In a Fox News Interview over the weekend Trump refused to exclude the possibility of recession. This further fueled uncertainty.
There is a transition period because of the magnitude of what we are doing. Trump stated on Sunday Morning Futures that he was “bringing wealth to America”. He suggested the current economic turmoil is a phase of adjustment.
Fears that the US economic growth could be significantly impacted by ongoing tensions over trade with Mexico, Canada and China are growing.
Investors prepare for an important week, as several economic reports are due, such as consumer and producer prices, readings of consumer sentiment, and expectations about inflation.
These indicators can provide additional insight on the current state of the economic system and whether or not inflationary pressures have begun to decrease.
Wall Street volatility reached its highest since December Monday as investors assessed the effects of tariffs to the US economy.
The CBOE Volatility Index VIX rose by over 24 % to 29,03, its highest level since August 2024.
Nasdaq S&P Dow Jones in Red
The Dow Jones Industrial Average dropped 1,037 points or 2,4% in its biggest single-day drop of the year. S&P 500 dropped 2.8% to its lowest point since September.
Investors rushed to sell high-growth tech stocks, which caused the Nasdaq composite to plummet by close to 5%.
The Nasdaq could be on course for its biggest one-day drop since September 20,22 when it dropped more than 5%.
Major indices are now in correction territory.
The S&P500 is down by 9.1% since its February high, and the Nasdaq fell 14%.
Russell 2000 (a gauge used to measure small-cap stock prices) has fallen 18% since its peak, bringing it closer to the bear market level.
Stocks in the technology sector are leading decliners
The biggest losses were suffered by high-growth tech stocks that had been the driving force behind the bull market of recent years.
Tesla’s stock dropped 13% and is on track for its worst day of trading since 2020. Alphabet Meta and Nvidia all declined around 5% while Palantir, a favorite of retail traders, fell more than 10%.
MicroStrategy, one of the Nasdaq 100’s biggest losers, saw the stock price plummet by more than 17 percent, becoming the worst performing index.
Tesla was close behind, with a drop of over 14%.
Investor sentiment is fragile as the Federal Reserve continues to maintain a conservative stance in regards to interest rates, and with economic uncertainty on the rise.
As updates occur, this post Dow drops over 1,000 points and Nasdaq falls 5% due to trade tensions that rattle investors could be updated.
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