Stock markets fell even further as investors around the world worried about the American economy and corporate health and the volatile impact of tariffs on global trade.
The S&P 500 skated on the course on the worst day of the year, roughly 2% in early trading on Wall Street. After being sold for three consecutive weeks, the index has come closer to the Wall Street term “fix,” which is down more than 8% from last month's record set, falling more than 10% from its recent high.
“The market fears the uncertainty that tariff rhetoric brings,” said Andrew Brenner, head of international bonds at International Alliance Securities. The S&P 500 has been slightly down since Election Day, erasing all profits since the vote.
The enthusiasm for a course that reversed artificial intelligence has been hit even harder by technology-rich NASDAQ. The index was categorized as an amendment last week and fell nearly 4% on Monday. Tesla's shares fell more than 8%, while Alphabet, Apple and Nvidia each fell more than 4%.
“We've been working hard to get the most out of our lives,” said Larry Tentarelli, Chief Technical Strategist at Blue Chip Daily Trend Report. With many tech companies getting so large, stock movements have a major impact on the broader market.
European and Asian stocks were under pressure, but the decline was pale compared to US losses. The index, which tracks the largest public companies in the eurozone, reaching record highs last week, fell 1.5%. Hong Kong's Hangsen index fell by more than 1.8%.
Investors seeking Havens continued to choose the relative security of their bonds, pushing the 10-year U.S. Treasury yield to 4.24%. The bond prices move in reverse. The combination of a decline in stocks and a fall in interest rates is often seen as a sign of economic unrest.
These concerns are partially reflected in traders' bets that will resume pricing for the three cuts this year, according to CME FedWatch. Stock investors generally reduce borrowing costs for businesses and consumers, but not when concerns about economic growth have been spurred.
In an interview with Fox News that aired Sunday, President Trump refused to rule out the possibility that his policies could cause a recession.
Over the past few weeks, Trump has threatened, imposed, suspended and resumed tariffs on America's biggest trading partners, Canada, Mexico and China. A dizzy shift, including last-minute exemptions for some automakers and energy products, has led to increased uncertainty and has left investors uneasy.
“Market volatility isn't about bad news about tariffs, but far less uncertainty about tariff uncertainty, especially what the policy is, where it is, how long it will last, what the end result will be,” said David Bernsen, Chief Investment Officer of the Bahnsen Group.
With most measures, the US economy remains strong, with the latest data on employment stable. But economists have become pessimistic to grasp Trump's approach to tariffs that have companies trying to plan investment and employment. Reducing the freezing of federal workforce and government spending has also dented consumer sentiment.
This week's inflation report will be viewed in close tune as consumer surveys suggest that price increases are expected to recover. The rising costs of eggs and other essentials can narrow down shoppers' wallets and increase prices due to tariffs and mass deportation.
Analysts at JPMorgan Chase said in the report that there is a “substantially high risk” of a global recession this year due to “the extreme US policies.” They have made the chance of such a slump 40%. A Goldman Sachs strategist has increased the likelihood of a US recession next year to 20%, citing “policy change as a major risk.”
On Monday, China's retaliatory tariffs were enforced on US agricultural products. On Wednesday, the Trump administration is expected to introduce a 25% tariff on all steel and aluminum imports. Trump also threatened to impose “mutual tariffs” next month on all US imports to align the tariffs and trading policies of other countries.
