The United States stock market experienced a sharp downturn on Monday, triggering massive losses amounting to $4 trillion in market value.
The sell-off was largely driven by growing concerns over President Donald Trump’s aggressive tariff policies, combined with economic uncertainties fuelled by potential government spending cuts and workforce reductions.
The S&P 500 tumbled 2.7 per cent, nearing a 9 per cent drop from its all-time high recorded just last month. At one point during the day, it was down as much as 3.6 per cent, marking its worst trading day since 2022.
The Dow Jones Industrial Average plunged by 890 points, or 2.1 per cent, after trimming an earlier loss of more than 1,100 points.
Similarly, the
Nasdaq Composite plummeted by 4 per cent, as major tech stocks continued to face severe pressure.
Market analysts have attributed the widespread panic to
uncertainty over Trump’s continued push for protectionist trade policies, which have disrupted supply chains, manufacturing, and investor confidence.
David Mericle, Chief US Economist at Goldman Sachs, slashed his forecast for the country’s economic growth to 1.7 per cent from the earlier estimated 2.2 per cent for the end of 2025, noting that tariffs posed a more significant threat than previously anticipated, reported AP.
Tech stocks lead the plunge
One of the most notable impacts of the market crash was seen in technology stocks. Companies like Nvidia, which had soared over 820 per cent from 2023 to 2024, saw their stock value plunge by 5.1 per cent on Monday, pushing their year-to-date losses to more than 20 per cent.
Tesla, led by Elon Musk, faced an even sharper decline of 15.4 per cent, bringing its total loss for 2025 to 45 per cent.
Analysts believe that Tesla’s downturn was also fuelled by growing concerns about its association with Musk, whose close ties with Trump were initially viewed as an advantage but have now turned into a liability.
Editor’s Picks
Protests targeting Tesla dealerships and doubts about workforce stability have further contributed to the sharp decline in its stock value.
Other major companies dependent on consumer spending also suffered severe losses. Cruise-line operator Carnival Corporation dropped 7.6 per cent, while United Airlines slid by 6.3 per cent. The declining consumer confidence in the US economy has put severe pressure on businesses reliant on discretionary spending.
The bond market and global chain reaction
In response to the market turbulence, investors flocked to safer assets like US Treasury bonds, causing their prices to rise sharply and yields to fall.
The yield on the 10-year Treasury bond dropped to 4.22 per cent from 4.32 per cent within a day — a significant shift for the bond market. Additionally, bitcoin, once a symbol of unstoppable momentum, fell below $80,000 from its December high of $106,000.
The turmoil was not confined to the US market alone. Asian stock markets faced a heavy blow following the Wall Street plunge. Japan’s Nikkei 225 fell by 1.7 per cent, Australia’s S&P/ASX 200 dipped by 0.9 per cent, and South Korea’s Kospi dropped by 1.5 per cent.
In China, the Shanghai Composite declined by 0.4 per cent, while the Hang Seng in Hong Kong fell by 0.9 per cent.
Mirroring global trends, the Indian stock markets opened on a weaker note on Tuesday. The Sensex slipped 414.05 points, or 0.56 per cent, to 73,701.12 at 9:16 am after opening below the 74,000 mark, while the Nifty 50 declined 140.15 points, or 0.62 per cent, to 22,320.15.
The ripple effect was driven by investor fears that Trump’s trade tariffs would also negatively impact the global economy, especially economies heavily reliant on US exports.
Trump’s outlook on the economy
In the wake of the sell-off, President Trump, when asked whether he anticipated a recession in 2025, responded to Fox News stating, “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.”
Trump’s administration has been pushing for a series of economic policies aimed at limiting government spending, cutting the federal workforce, and boosting domestic manufacturing.
However, these measures have contributed to fears of economic shrinkage, as evidenced by real-time indicators compiled by the Federal Reserve Bank of Atlanta. The indicators suggest that the US economy may already be contracting.
Goldman Sachs has now increased the probability of a recession within the next year to 20 per cent, citing the increasing uncertainty in fiscal and trade policy.
Meanwhile, Federal Reserve Bank of St. Louis data showed that the bottom 50 per cent of US households owned only 1 per cent of corporate equities and mutual fund shares, whereas the wealthiest 10 per cent controlled around 87 per cent of such assets.
Kush Desai, a White House spokesman, responded to the market concerns by stating that Trump’s economic agenda has led to “trillions in investment commitments that will create thousands of jobs.” Nevertheless, investor sentiment continues to fluctuate as companies remain cautious about the long-term impact of tariffs and reduced government spending.
As the week progresses, market participants are closely watching whether lawmakers can pass a funding bill to prevent a partial government shutdown and how Trump’s policies will evolve to stabilise the economy. Wall Street remains highly volatile, with many anticipating further declines if policy uncertainty persists.
Monday’s sell-off, which resulted in a staggering $4 trillion loss in market value, has cast a shadow over the US economy and has
triggered fears of a recession.
Also Watch:
With inputs from agencies
More from Explainers
End of Article