The world's most widely tracked stock market benchmark slipped into the revision Thursday. This is a drop that underlines how the bull market for two years in the early days of the Trump administration is steam shortage.
The move stems from growing pessimism from investors over the past few weeks about Whips' policy declarations from Washington. Federal workers' tariffs and massive layoffs have made them unsettled on Wall Street.
On Thursday, the S&P 500 fell 1.4%. After a few weeks of sales, the index is now being revised, down 10.1% from the peak reached a month ago. This is Wall Street terminology when the index drops more than 10% from its peak, and is worried about a gathering where investors' sand lines are sold out.
Other major indices, including the Russell 2000 and the Tech Heavy Nasdaq Composite, were already falling into fixes. On Thursday, the Nasdaq fell 2%, but the Russell 2000 SME index, which tends to be exposed to economic decline and currents, fell 1.6%.
A deeper worry among investors is that uncertainty about the impact of President Trump's policies has led to consumers spending less money and businesses blocking investment. That obedience could in turn drive the economy into a slump and force investors to reevaluate the company's valuation.
“I think what the market is telling us is that we are very concerned about the possibility of a recession,” said Kristina Hooper, Chief Global Market Strategist at Invesco. “That's certainly not what the market expected to be 2025.”
According to data from Yardeni Research, this is the 11th revision in the S&P 500 since the 2008-2009 financial crisis. Three of the previous recessions have been transformed into a bare market, defined as a more severe decline of at least 20%.
So far, the administration has brushed away market turmoil. Treasury Secretary Scott Bescent said Thursday that the focus is on the “real economy” sent by business leaders and investors. “I've not been worried about a bit of volatility over the course of three weeks,” he said.
As stocks have been declining in recent weeks, the Trump administration has stressed that its economic policies are designed to drive job growth in the long term, but could cause market disruption in the short term.
Sheemashhah, Chief Global Strategist of Principal Asset Management, said the economy is already beginning to launch “negative effects.”
This pain has been felt rapidly among the giants' tech giants that have driven the market in recent years, but once-collected stock prices have overturned the course. The Tech Heavy Nasdaq Composite Index has dropped by about 14% from its December peak.
The sale also spreads to other corners of the market, showing wider concerns than simply replicating highly regarded tech companies. The Russell 2000 is approaching the full-scale bear market, down 18% from its peak in November.
Stock market sectors exposed to tariffs like food producers are falling. This effect is felt by other companies, such as retailers and airlines. This is concerning pullbacks among consumers if the economy enters a recession. On Thursday, low-cost retailer General Dollar said that customer traffic had declined in the most recent quarter, and the company projected continued financial pressure. Delta Air Lines cut its financial forecast this week for the first three months of this week.
“So far, in 2025, the US economy is just facing headwinds,” Shah said.
On Thursday, Trump threatened to impose a 200% tariff on European wine and champagne a day after the European Union announced retaliatory tariffs on imports of US whiskey and several other American products. The president has already added tariffs on steel and aluminum imports, and a wide range of products from China.
And when asked by a reporter about tariffs in Canada, one of the largest trading partners in the United States, he asserted he would not offer a reprieve.
“Sorry, I have to do this,” Trump said.
Even the recent good news about the economy has not had a calming effect as the ever-moving goal posts have rattled investors. On Thursday, weekly unemployment claim reports were lower than expected. On Wednesday, reading the consumer price index more than expected helped temporarily strengthen the stock.
Investors are worried that once tariffs are fully in effect, prices will rise. Trump's immigration policies and the firing of federal employees through so-called government efficiency are also in the background, as well as the threat of impending government shutdowns.
“The outlook for inflation depends on tariffs, deportation and dogs,” said Bill Adams, the chief economist at Comerica Bank.
