US markets experienced a sudden drop on Monday as worries among investors increased over President Donald Trump’s economic policies, causing significant losses in stocks and Bitcoin. The decline followed Trump’s refusal to dismiss the idea of a recession, unsettling markets that were already nervous about his tariff-driven trade agenda.
All three main stock indices started lower and continued to fall throughout the day. The Dow Jones Industrial Average fell by 890 points after previously dropping more than 1,100 points. The S&P 500 decreased by 2.7%, while the tech-heavy Nasdaq Composite experienced a steep drop of 4%, marking its worst single-day performance since September 2022.
As reported by Reuters, Trump’s tariff policies have shaken investor confidence, resulting in a loss of $4 trillion from the S&P 500’s peak last month. Technology stocks were hit the hardest, pushing the Nasdaq further into correction territory. The S&P 500 finished 8.6% below its peak from February 19. Major tech companies, including Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA), all faced losses. Tesla dropped 15.4%, bringing its year-to-date decline to nearly 45%, partly due to falling sales in Europe and criticism over CEO Elon Musk’s connections to the Trump administration.
“The stock market is losing its confidence in the Trump policies,” said Ed Yardeni, President of Yardeni Research. Market strategist Anthony Saglimbene of Ameriprise added, “President Trump’s comments, which left the possibility of a recession open, made investors who were already anxious even more unsettled.”
Bitcoin also took a significant hit, falling to around $78,000—its lowest level since November—as investors moved away from riskier assets. Meanwhile, the CBOE Volatility Index (VIX), often referred to as Wall Street’s “fear gauge,” rose to its highest level of the year.
The White House attempted to downplay the concerns in the markets, insisting that Trump’s economic policies would lead to long-term growth. White House spokesman Kush Desai stated, “Since President Trump was elected, industry leaders have responded to President Trump’s America First economic agenda with tariffs, deregulation, and the boosting of American energy with trillions in investment commitments that will create thousands of new jobs.”
Despite these reassurances, warning signs for the economy are becoming clearer. The stock market has just completed its worst week since the November election, and consumer confidence is dropping as inflation rises. Trump’s recent decision to double tariffs on Chinese imports from 10% to 20%, and a 25% tariff on steel and aluminium set to start on March 12, has raised even more worries. Additionally, he has threatened to impose a 250% tariff on Canadian dairy products and further taxes on lumber imports.
With economic uncertainty on the rise, investors turned to safer assets, which caused the yield on the 10-year US Treasury bond to fall to 4.225%. Market analysts are now looking forward to important inflation data expected to be released later this week to determine if price increases are a lasting issue.
A recession is typically defined as two consecutive quarters of negative GDP growth. The last US recession happened in early 2020 during the Covid-19 pandemic, resulting in widespread job losses and economic decline.
Trump refuses to rule out recession, says the economy is in ‘transition’ amid market turmoil
On Sunday, Trump declined to answer clearly when asked if the country is heading for a recession, instead offering a vague reply. “I hate to predict things like that,” he said in an interview on Fox News’ Sunday Morning Futures With Maria Bartiromo when questioned about the possibility of an economic downturn in 2025. “There is a period of transition because what we’re doing is very significant—we’re bringing wealth back to America,” he stated. “It takes a little time.”
Trump’s commerce secretary, Howard Lutnick, was more direct in dismissing concerns. “Absolutely not,” he replied to NBC when asked whether Americans should prepare for an economic downturn.
However, economic challenges keep piling up. The stock market just finished its worst week since the November election, and consumer sentiment has declined as shoppers worry about rising prices due to Trump’s changing tariffs on Canada, Mexico, and China.
Adding to the uncertainty, mass layoffs continue across various government agencies, with billionaire advisor Elon Musk overseeing extensive job cuts. When reporters pressed Trump again about the likelihood of a recession aboard Air Force One, he gave a noncommittal answer: “Who knows?”
Economic indicators raise alarms
The Atlanta Federal Reserve is now projecting a 2.4% drop in GDP growth for the first quarter of 2025, which would be the worst performance since the Covid-19 pandemic.
Kevin Hassett, Trump’s chief economic advisor, suggested on ABC that tariffs might become permanent. He explained that how long they last depends on how the targeted countries respond. If they do not meet US demands, the tariffs could remain in place as part of a new economic balance, he stated.
During his State of the Union speech, Trump told Americans to expect “a little disturbance” as tariffs take effect. “We’re okay with that. It won’t be much,” he assured.
Nonetheless, economic experts remain cautious. Goldman Sachs increased its estimate of a US recession occurring in the next 12 months from 15% to 20%. Morgan Stanley also projected weaker growth than expected.
A recession is typically defined as two consecutive quarters of negative GDP growth. The last US recession occurred in early 2020 during the Covid-19 crisis, resulting in millions of job losses.
(Inputs from Reuters and ANI)