NEW YORK – On Monday, Wall Street faced a deeper downturn as uncertainty loomed over how far President Donald Trump would push the economy with tariffs and other strategies to achieve his goals.
The S&P 500 suffered a 2.7% decline, nearing 9% below its peak from last month. At its lowest, it was down 3.6%, nearly matching its worst day since 2022. Back then, high inflation was affecting budgets and sparking recession fears, though such a downturn didn’t occur.
The Dow Jones Industrial Average fell 890 points, or 2.1%, after recovering a larger deficit of over 1,100 points, and the Nasdaq composite plunged by 4%.
This marked the toughest day in a turbulent period for the S&P 500, which experienced fluctuations of more than 1% for seven out of eight days due to ongoing tariff tensions around Trump’s policies. The main concern is that these volatile changes might either hinder the economy directly or create enough uncertainty to paralyze companies and consumers into stalling economic activity.
Signs of weakening were already indicated by surveys reflecting increased pessimism, and according to a real-time economic tracker by the Federal Reserve Bank of Atlanta, the U.S. economy might already be contracting.
When asked about the likelihood of a 2025 recession during a weekend interview, Trump said on Fox News Channel: “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 further mentioned, “It takes a little time. It takes a little time.”
Trump aims to reinstate manufacturing jobs in America, citing this as a justification for tariffs. Treasury Secretary Scott Bessent suggested the economy might undergo a “detox” as it reduces reliance on government spending. The administration is trying to curtail federal expenditure, reduce the federal workforce, and increase deportations, which could affect the job market.
However, the U.S. job market has shown stable hiring rates, and the economy ended last year with solid growth. Yet economists have tempered their growth projections for this year. For instance, Goldman Sachs’ David Mericle adjusted his forecast for U.S. economic growth in 2025 to 1.7% from 2.2%, influenced heavily by potential expansive tariffs. Mericle estimates a 20% chance of an upcoming recession, highlighting the White House could reverse policy shifts if the economy faces significant risks.
Chris Larkin from E-Trade expressed that while markets often face multiple influences, tariffs were currently the predominant concern.
Reacting to the market slumps, White House spokesperson Kush Desai emphasized companies’ response to Trump’s “America First” agenda, with significant investment commitments expected to create thousands of jobs.
On Monday, Trump held a meeting with tech industry leaders, though media access was restricted.
The uncertainties impacting Wall Street have notably affected some stalwarts. Tech giants and companies that thrived on the artificial intelligence boom in recent years have faced significant stock declines.
Nvidia’s stocks decreased by 5.1%, bringing its loss for the year to over 20%, a steep drop from its nearly 820% rise over 2023 and 2024.
Tesla, Tesla led by Elon Musk, saw a sharp 15.4% decline, increasing its losses in 2025 to 45%. Initially, hopes of beneficial ties between Musk and Trump boosted the company’s stock post-election. However, fears over branding issues related to Musk have caused stocks to dip, with protests targeting Tesla amid government workforce reduction efforts.
Sectors reliant on consumer confidence also faced declines. Carnival, the cruise-ship operator, experienced a 7.6% drop, and United Airlines fell 6.3%.
The market struggles weren’t limited to stocks. Assets like bitcoin, whose values appeared persistent in growth discussions earlier, declined. Bitcoin’s value went below $80,000, compared to over $106,000 in December.
Conversely, as investors sought more stable options, U.S. Treasury bonds became more appealing, pushing prices higher and yields lower. The 10-year Treasury yield dropped to 4.22% from 4.32% last Friday. It has been on a downward trend since January, moving from roughly 4.80% amid growing economic concerns.
Interestingly, despite the volatility, Wall Street hasn’t ceased dealmaking. Redfin’s stocks soared 67.9% following Rocket’s announcement to acquire the digital real estate firm in a $1.75 billion all-stock agreement, though Rocket’s stocks fell 15.3%.
In a separate deal, ServiceNow fell 7.9% after its announcement of purchasing AI-assistant developer Moveworks for $2.85 billion, partially paid in cash and stock.
Overall, the S&P 500 dropped by 155.64 points to reach 5,614.56. The Dow Jones Industrial Average reduced by 890.01 points, landing at 41,911.71, and the Nasdaq composite went down 727.90 points to 17,468.32.
Internationally, European markets saw declines following a mixed Asian session. Hong Kong and Shanghai indexes fell by 1.8% and 0.2% respectively, with China’s February consumer prices decreasing for the first time in over a year, highlighting persistent demand weakness affected by the early Lunar New Year celebration.