Wall Street Dips as Trump’s Tariff Fears Loom

NEW YORK (AP) — The U.S. stock market is experiencing a significant downturn as concerns rise over President Donald Trump‘s enduring tariff policies and their potential impact on the economy. On Monday, the S&P 500 fell 2.8% in afternoon trading, following a tumultuous week that marked the worst performance since September.

The Dow Jones Industrial Average dropped 838 points, or 2%, while the Nasdaq composite saw a decline of 4.3%. This sell-off represents the latest shifts in the volatile market, with seven instances of swings greater than 1% over the past eight days attributed to Trump’s inconsistent tariff strategy.

The market’s turbulence has raised fears that ongoing volatility could lead to economic paralysis for U.S. companies and consumers alike. The S&P 500 has now retraced 8.7% from its peak on February 19, amid signs of a weakening economy evidenced by growing pessimism in surveys.

Further analysis from the Federal Reserve Bank of Atlanta indicates the U.S. economy may already be shrinking, compounding investor anxieties. In a recent interview on Fox News, Trump was hesitant to predict an impending recession but acknowledged a transitional period, stating, “It takes a little time. It takes a little time.”

Trump’s Treasury Secretary, Scott Bessent, echoed these sentiments, suggesting that the economy might go through a “detox” phase as it adjusts to reduced government spending.

As businesses brace for potential downturns, economists are adjusting their growth forecasts. David Mericle of Goldman Sachs revised the U.S. economic growth estimate down to 1.7% from 2.2% for the end of 2025, citing the increased scope of tariffs as the primary concern. He noted a one-in-five chance of a recession within the year but acknowledged that the White House could alter policies if the risks became significant.

Chris Larkin, managing director at E-Trade, remarked, “There are always multiple forces at work in the market, but right now, almost all of them are taking a back seat to tariffs.”

The volatility has notably affected major tech stocks, with companies such as Nvidia and Tesla experiencing steep declines. Nvidia’s stock plummeted another 5.4% on Monday, marking a 20% loss since January. Meanwhile, Tesla’s shares fell 14.2%, deepening its year-to-date loss to over 40%.

Consumer-related companies are among those hit hardest, with United Airlines dropping 8.4%, and Carnival Corporation lowering by 8.7%. The negative sentiment isn’t limited to equities; various investments, including cryptocurrencies like Bitcoin, have also declined significantly.

In a shift in investment strategies, many investors have turned to U.S. Treasury bonds, driving up their prices and subsequently lowering yields. The yield on the 10-year Treasury fell this week to 4.22%, down from 4.32% on Friday, reflecting growing concerns about the economy.

Despite the tumult, there remains activity in the market. Redfin‘s stock rose 63.7% following an announcement that Rocket would acquire the digital real estate brokerage for $1.75 billion, though Rocket’s own stock suffered an 17.3% decline. Conversely, ServiceNow saw an 8.1% decrease after announcing its acquisition of AI-assistant maker Moveworks for $2.85 billion.

Markets overseas mirrored the turmoil, with European indexes reportedly closing lower after mixed results in Asia, where indexes fell 1.8% in Hong Kong and 0.2% in Shanghai.

AP Business Writers Matt Ott and Elaine Kurtenbach contributed to this report.