President Donald Trump’s tariff measures have unnerved investors, sparking fears of an economic slowdown and triggering a selloff that wiped out $4 trillion from the S&P 500’s peak last month. This comes after a period when Wall Street had been rallying in support of his economic agenda.
A wave of new policies from the Trump administration has heightened uncertainty for businesses, consumers, and investors, particularly the escalating tariffs targeting major trading partners, including Canada, Mexico, and China.
“We’ve seen clearly a big sentiment shift,” said Ayako Yoshioka, senior investment strategist at Wealth Enhancement. “A lot of what has worked is not working now.”
The stock market’s decline deepened on Monday, with the benchmark S&P 500 falling 2.7%, marking its sharpest daily drop this year. The Nasdaq Composite tumbled 4%, its largest one-day loss since September 2022.
By Monday’s close, the S&P 500 had declined 8.6% from its February 19 record high, erasing over $4 trillion in market value and nearing a 10% drop, which would signal a market correction. The tech-heavy Nasdaq has also fallen more than 10% from its December peak.
Over the weekend, Trump avoided speculating on the possibility of a US recession, even as investors grew increasingly concerned about the impact of his trade policies.
“The amount of uncertainty that has been created by the tariff wars with regard to Canada, Mexico, and Europe is causing boards and C-suites to reconsider the pathway forward,” said Peter Orszag, CEO of Lazard, at the CERAWeek conference in Houston.
“People can understand ongoing tensions with China, but the Canada, Mexico, and Europe part is confusing. Unless that gets resolved over the next month or so, this could do real damage to the economic prospects of the US and M&A activity,” Orszag added.
Delta Air Lines on Monday cut its first-quarter profit forecast by half, sending its shares down 14% in after-hours trading. CEO Ed Bastian attributed the revision to rising economic uncertainty in the US.
Investors are also keeping a close eye on whether lawmakers can pass a funding bill to prevent a partial federal government shutdown. Meanwhile, a key US inflation report is expected on Wednesday.
“The Trump administration seems a little more accepting of the idea that they’re OK with the market falling, and they’re potentially even OK with a recession in order to exact their broader goals,” said Ross Mayfield, investment strategist at Baird. “I think that’s a big wake-up call for Wall Street.”
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