The recent downturn in the US stock market has intensified, with Wall Street expressing concerns over President Donald Trump’s approach to economic stability and his willingness to allow pain for political gains. As of midday trading on Monday, the S&P 500 index had declined by 2.1%, following its poorest weekly performance since September. The Dow Jones Industrial Average fell by 405 points (0.9%), and the Nasdaq composite experienced a significant drop of 3.6%.
In the past eight days, the market has recorded five swings of more than 1%, showcasing volatility largely attributed to Trump’s fluctuating stance on tariffs. Investors are apprehensive that this unpredictability could negatively impact economic conditions or induce a paralysis among businesses and consumers. The S&P 500 is currently trading 8% lower than its peak in February.
Indicators of economic health are showing signs of deterioration, with surveys reflecting growing pessimism. A notable collection of real-time data from the Federal Reserve Bank of Atlanta suggests the economy may already be contracting. When asked about the possibility of a recession in 2025, Trump refrained from making predictions but acknowledged the challenges of transitioning the economy towards self-sufficiency in manufacturing.
Trump has emphasised the necessity of reviving American manufacturing jobs, suggesting that tariffs are instrumental in achieving this goal. His Treasury Secretary has indicated that the economy may need to undergo a “detox” period to recover from reliance on government spending.
Despite stable hiring and a robust end to the previous year, economic projections for the current year are being downgraded. For example, a Goldman Sachs economist revised growth expectations from 2.2% to 1.7% for late 2025, partly due to anticipated increased tariffs.
Market concerns are particularly affecting major technology stocks, which have experienced sharp declines. Nvidia has fallen by 4.9% recently, totalling a 20% drop for 2025. Tesla likewise saw an 8.7% decrease, pushing its losses for the year beyond 40% amid worries about the brand’s connection to Musk.
The decline is not isolated to tech; companies dependent on consumer spending, such as United Airlines and Carnival, also faced steep losses. Broader market trends are indicating an investor shift toward US Treasury bonds, as they seek safer assets amidst economic uncertainty, resulting in rising Treasury prices and lower yields.
Overall, the current economic landscape exhibits considerable uncertainty, primarily fueled by tariff policies and the political climate, leaving investors cautious about future prospects.