Stocks Plummet as Trump’s Tariff Talks Fuel Market Uncertainty

New York, NY — U.S. stocks fell sharply on Monday as uncertainty surrounding President Donald Trump’s conflicting tariff policies ignited a widespread market selloff. The three major indexes opened in negative territory and closed lower after a day marked by volatility, with concerns mounting about the potential for economic recession.

The Dow Jones Industrial Average plummeted 890 points, or 2.08%, recovering slightly from a loss exceeding 1,100 points. The S&P 500 closed down 2.7%, while the Nasdaq Composite suffered a significant drop of 4%, marking its largest single-day decline since September 2022.

This decline has exacerbated the already poor performance of the markets, with all three indexes erasing gains made since the U.S. presidential election in November. Investor anxiety has been overwhelmingly influenced by Trump’s comments on the tariffs, as he described the economy as undergoing ‘a period of transition’ and did not rule out the possibility of a recession. During an appearance on Fox News‘ ‘Sunday Morning Futures’, Trump remarked, ‘I hate to predict things like that. There is a period of transition because what we’re doing is very big.’

Technology stocks, a key driver of the market, contributed heavily to the downward pressure. The S&P 500 fell 8.6% from its recent record high, primarily due to the performance of major tech companies. The so-called ‘Magnificent Seven’ tech giants—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—all recorded losses on Monday.

Anthony Saglimbene, chief market strategist at Ameriprise, stated, ‘President Trump’s comments not necessarily taking a recession off the table unnerved investors who were already jittery.’

The White House, however, remains optimistic, with spokesman Kush Desai asserting that President Trump would drive ‘historic’ economic growth in his second term. ‘Since President Trump was elected, industry leaders have responded to President Trump’s America First economic agenda with trillions in investment commitments that will create thousands of new jobs,’ Desai said.

Tesla’s stock fell by 15.4%, reversing much of the gains it made since the election as it struggles with a 45% decline year-to-date. Protests against CEO Elon Musk’s alignment with Trump and diminishing sales in Europe have exacerbated this issue.

Other tech stocks, including Nvidia and Palantir, also faced declines of 5% and 10%, respectively. ‘When stocks overextend on the upside, they overextend on the downside,’ remarked Gina Bolvin, president of Bolvin Wealth Management Group.

Market volatility was reflected in the VIX index, often referred to as Wall Street’s fear gauge, which reached its highest level of the year. Investors have been driven by ‘extreme fear’, according to Saglimbene.

Bitcoin dipped to around $78,000 on Monday, its lowest value since November, following a general selloff of risky assets. The S&P 500 had already posted a 3.1% decline last week, marking its worst performance since September.

Ed Yardeni, president of Yardeni Research, remarked, ‘The stock market is losing its confidence in the Trump 2.0 policies.’ Trump recently proposed significant tariffs on imports from Canada and Mexico, elevating tensions. The planned tariff on all Chinese imports will rise from 10% to 20%, with a new tariff rate of 25% on others expected to be implemented soon.

Concerns are growing about the impact of tariff discussions and the underlying uncertainty that comes with them. David Bahnsen, chief investment officer at the Bahnsen Group, observed, ‘The talk of tariffs is, in a lot of ways, worse than the implementation of them.’ He warned that ongoing tariff uncertainties could harm economic activity for a quarter or two, leading to negotiations that will leave many puzzled.

Meanwhile, signs of economic strain are emerging: layoffs are on the rise, hiring is slowing, consumer confidence is diminishing, and inflation continues upward. The yield on the 10-year U.S. Treasury note fell to 4.225%, as investors sought security in government bonds due to ongoing economic concerns.

As markets brace for upcoming monthly inflation reports set to be released this Wednesday and Thursday, investors will be closely monitoring whether inflation rates stubbornly persist through February, which could further dictate market movements in the coming weeks.

A recession is typically defined by two consecutive quarters of negative GDP growth per the National Bureau of Economic Research. Analyst Sam Stovall, chief investment strategist at CFRA Research, stated, ‘How long this period of investor caution persists depends on how quickly global trade clouds and recession threats dissipate.’