US stocks plummeted on Monday, wiping out $1.75 trillion in market value as President Donald Trump’s shifting trade policies and refusal to rule out a recession rattled investors.
The benchmark S&P 500 tumbled 2.7 per cent, its biggest daily drop of the year, pulling the index 8.6 per cent below its all-time high reached on February 19. The tech-heavy Nasdaq Composite plunged 4 per cent, marking its steepest single-day decline since September 2022.
US stocks face rout
The Dow Jones Industrial Average fell by 890 points, or 2.08 per cent, after being down more than 1,100 points earlier in the session.
All three major indexes have now erased their gains since the November 2024 presidential election.
Tesla, the electric car company run by Trump’s efficiency advisor Elon Musk, suffered some of the steepest losses among individual companies, plummeting 15.43 per cent and shedding approximately $125 billion in market value in a single day.
The selloff spread globally, with Asian markets extending losses on Tuesday. Japan’s Nikkei 225 and Taiwan’s TAIEX dropped more than 2.5 per cent, while Hong Kong’s Hang Seng slid about 1.5 per cent.
Trump’s economic forecast worries
Investor anxiety heightened after Trump, in a Fox News interview aired on Sunday, declined to rule out a recession this year.
“I hate to predict things like that. There is a period of transition, because what we’re doing is very big,” Trump said. “We’re bringing wealth back to America. That’s a big thing…It takes a little time, but I think it should be great for us.”
The market rout deepened amid uncertainty over the president’s tariff policies. Last week, Trump imposed a 25 per cent tariff on imports from Mexico and Canada and doubled duties on Chinese goods to 20 per cent, only to postpone some Mexican and Canadian tariffs until April 2. A separate 25 per cent tariff on steel and aluminum imports is set to take effect on Wednesday.
In response to market concerns, White House spokesman Kush Desai issued a statement saying Trump was set to spark “historic” growth in his second term.
“Since President Trump was elected, industry leaders have responded to President Trump’s America First economic agenda of tariffs, deregulation, and the unleashing of American energy with trillions in investment commitments that will create thousands of new jobs,” Desai said.
The National Economic Council head Kevin Hassett downplayed concerns about the economy in a CNBC interview on Monday, describing them as “blips in the data.”
“What I think that what’s going to happen is the first quarter is going to squeak into the positive category, and then the second quarter is going to take off as everybody sees the reality of the tax cuts,” Hassett said.
Some Republican lawmakers have broken ranks with the president over the market decline. Kentucky Senator Rand Paul expressed concern on social media platform X: “When the markets tumble like this in response to tariffs, it pays to listen.”
Wall Street’s fear gauge, the VIX, hit its highest level this year as bitcoin tumbled to around $78,000, its lowest since November.
The yield on the 10-year US Treasury slid to 4.22 per cent as investors sought safer assets, signalling growing concern about economic growth.
Investors are now focused on Wednesday’s inflation report for further clues about the health of the economy.
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