U.S. stock market drops by $4 trillion as Trump moves forward with tariffs – Reuters
Market Woes Deepen as Tariff Uncertainty Grows
The U.S. stock market has taken a severe hit, losing $4 trillion in value as investor concerns over President Donald Trump’s tariff policies continue to rise. Wall Street, which initially welcomed much of Trump’s economic agenda, is now grappling with increased uncertainty, leading to a sharp market sell-off.
A series of trade disputes with Canada, Mexico, and China has rattled businesses and consumers alike, fueling fears of an economic downturn. Ayako Yoshioka, a senior investment strategist at Wealth Enhancement, noted a major shift in sentiment, saying that strategies that previously worked are now failing in the current market climate.
On Monday, the S&P 500 plunged 2.7%—its biggest single-day drop this year—while the Nasdaq Composite fell 4%, marking its worst performance since September 2022. Since hitting a record high on February 19, the S&P 500 has declined by 8.6%, shedding over $4 trillion in market value. A further drop could officially push the index into correction territory.
Tariff Concerns and Recession Fears
Despite growing worries, Trump has refused to speculate on whether the U.S. might slip into a recession. The ongoing trade tensions with Canada, Mexico, and Europe have left corporate leaders uncertain about the future. Peter Orszag, CEO of Lazard, warned that unless these disputes are resolved soon, they could significantly damage the U.S. economy and slow mergers and acquisitions.
Adding to the turmoil, Delta Air Lines slashed its profit estimates for the first quarter, blaming economic instability. The airline’s stock dropped 14% in after-hours trading, reflecting broader concerns across industries. Investors are now closely watching whether Congress can pass a funding bill to prevent a government shutdown, as well as an upcoming inflation report expected later this week.
Ross Mayfield, an investment strategist at Baird, suggested that the administration appears willing to accept market losses and even a possible recession to achieve its policy goals. This realization, he said, has been a wake-up call for Wall Street.
Tech Stocks and Bitcoin Take a Hit
The stock market downturn has hit technology giants particularly hard. The S&P 500’s technology sector fell 4.3% on Monday, with Apple and Nvidia both dropping around 5%. Tesla took an even bigger hit, plummeting 15% and losing $125 billion in market value. Bitcoin also suffered, declining by 5% as riskier assets faced investor pullback.
Despite the selloff, some defensive market sectors fared better. The utilities sector posted a 1% gain, while U.S. Treasury bonds saw increased demand, with 10-year Treasury yields falling to 4.22%.
Investor Sentiment Shifts
Hedge funds have been scaling back their stock exposure at the fastest rate in over two years, signalling a loss of confidence. Many had initially expected Trump’s pro-business policies, such as tax cuts and deregulation, to boost stocks. However, growing uncertainty over tariffs and other policy shifts has changed the outlook.
Market expert Michael O’Rourke noted that structural changes always bring friction and uncertainty. While some investors are taking profits, others worry about whether the stock market remains overvalued. Even after the recent slump, stock prices remain well above historical averages.
Analysts at Deutsche Bank predict that if investor positioning continues to decline, the S&P 500 could fall another 5.5%, hitting 5,300. Meanwhile, the Cboe Volatility Index has surged to its highest level since August, reflecting the heightened uncertainty in financial markets.
Edward Al-Hussainy, a senior analyst at Columbia Threadneedle Investments, suggested that the administration is still struggling to define a clear economic victory. Until they do, he warned, market volatility is likely to continue.
