President Donald Trump's tariffs have triggered a sharp sell-off in the U.S. stock market, erasing $4 trillion in value from the S&P 500 since its February peak.
Investors are concerned about the economic impact of the trade war with key partners like China, Canada, and Mexico, leading to a significant market decline.
The S&P 500 dropped 2.7 percent on Monday, marking its biggest daily fall of 2025, and is down 8.6 percent from its record high. The tech-heavy Nasdaq Composite also saw a 4 percent drop.
The uncertainty caused by these tariffs, alongside other policies from the Trump administration, has spooked businesses and investors, especially after the abrupt tariff changes with Canada, Mexico, and Europe.
Peter Orszag, CEO of Lazard, noted that while tensions with China are expected, the moves against Canada and Europe are creating confusion and damaging U.S. economic prospects.
Delta Air Lines, for example, cut its first-quarter profit estimate by 50 percent, citing economic uncertainty.
In addition to trade tensions, concerns about a potential U.S. government shutdown and inflation reports have added to the unease. While the administration appears willing to accept market downturns and possibly a recession to achieve its broader goals, this stance has raised alarms among investors.
The S&P 500's technology sector, led by companies like Apple, Nvidia, and Tesla, has been hit particularly hard, contributing to the overall market drop.
Despite the recent declines, stock valuations remain above historic averages.
However, concerns about high market valuations, combined with geopolitical and economic uncertainties, have caused investors to adjust their positions, reducing exposure to stocks.
The Cboe Volatility Index reached its highest level since August, signaling growing anxiety among investors. The market correction could deepen if these uncertainties continue to drive negative sentiment.
Source: Reuters
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