US stock market in sharp decline, S&P 500 loses $4 trillion in value

The U.S. stock market experienced a significant downturn on Monday as President Trump's tariff policies triggered investor panic. Concerns about an economic recession have led to the evaporation of $4 trillion from the S&P 500 index since its peak last month. This market volatility underscores the sensitivity of investors to trade policy uncertainties.

The benchmark S&P 500 index fell by 2.7%, marking its largest single-day drop so far this year. Concurrently, the index is down 8.6% from its all-time high on February 19th. The Nasdaq Composite Index plummeted 4%, its biggest single-day decline since September 2022, while the Dow Jones Industrial Average shed nearly 900 points, a drop of over 2%. The breadth of the sell-off indicates widespread concern among investors.

The technology sector of the S&P 500 declined by 4.3%, with both Apple and Nvidia falling by approximately 5%. Tesla plummeted 15%, losing roughly $125 billion in market capitalization. Other risk assets were also impacted, with Bitcoin falling by 5%. The S&P 500 has now erased all gains since Trump's election on November 5th, highlighting the market's reaction to his policies.

Trump's policies are unsettling the markets, creating uncertainty for businesses, consumers, and investors. The tariff actions against major trading partners like Canada, Mexico, and China are considered a primary cause. Large tech stocks and tech-related stocks, such as Nvidia and Tesla, which led the S&P 500 to consecutive gains of over 20% in 2023 and 2024, have underperformed in 2025, dragging down the major indices. This shift in market leadership is contributing to investor unease.

When asked if he anticipates a recession in 2025, Trump told Fox News Channel over the weekend: "I don't like to predict those things. There's a transition period because we're doing things that are very monumental. We're bringing wealth back to America. It's a big thing." Federal Reserve Chairman Jerome Powell stated on Friday that the U.S. economy is fundamentally sound, but also emphasized the need for caution in lowering borrowing costs. The contrasting views add to the overall market uncertainty.

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