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The US stock market experienced a dramatic sell-off on Monday, with growing investor concerns about trade tensions and fears of an economic slowdown. Following three weeks of losses, the S&P 500 continued to drop, while the tech-heavy Nasdaq Composite had its worst day since September 2022.
Meanwhile, the Dow Jones Industrial Average, consisting of 30 major companies, fell nearly 900 points, dropping below its 200-day moving average for the first time since November 1, 2023. The S&P 500 lost 2.7%, reaching its lowest level since September, and the Nasdaq plunged 4%, marking its largest single-day decline in 2025.
A Reuters report indicates that President Trump’s tariff policies have contributed to a $4 trillion loss from the S&P 500’s peak just last month, reversing the optimism that previously fueled Wall Street’s rally.
Key Factors Behind the US Stock Market Decline
Trump’s Tariffs Raise Recession Fears
Markets are becoming increasingly nervous after President Trump ramped up trade tensions by raising tariffs on Chinese goods from 10% to 20%. In response, China imposed a 15% tariff on American products, especially agricultural items from Canada.
This tariff war has led to concerns about rising inflation, which could prompt the US Federal Reserve to raise interest rates further. Investor unease deepened when Trump did not directly address recession worries in a Fox News interview, only stating, “There is a period of transition, because what we’re doing is very big.”
Tech Stocks Lead the Market Decline
Tech stocks, which had been driving the S&P 500’s growth in 2023 and 2024 with gains over 20%, are now at the forefront of the downturn. On Monday:
- The tech sector of the S&P 500 fell 4.3%.
- Apple (AAPL) and Nvidia (NVDA) both dropped around 5%.
- Tesla (TSLA) plunged 15%, losing a massive $125 billion in market value.
As tech stocks face difficulties in 2025, the broader market is losing its main growth engine, heightening investor pessimism.
Treasury Yields Decline as Investors Seek Safe-Haven Assets
Bond markets are reflecting growing concerns about a potential slowdown. The US 10-year Treasury yield dropped 9 basis points to 4.226%, and the 2-year yield fell 10 basis points to 3.906%.
Lower yields suggest a shift toward safer investments as investors move away from riskier stocks. However, this drop in yields also signals worries about weaker economic growth, further intensifying fears of a recession.
What Lies Ahead for the US Stock Market?
Investors are now looking ahead to key economic data releases later this week, including:
- Job openings data on Tuesday
- February’s Consumer Price Index (CPI) on Wednesday
- Producer Price Index (PPI) on Thursday
These reports will provide crucial insights into inflation trends and whether the Federal Reserve might adjust its monetary policy.
