The sell-off in the U.S. stock market intensified on Monday as Wall Street grappled with the extent of economic hardship President Donald Trump is willing to impose through tariffs and other measures to achieve his objectives.
The S&P 500 fell by 2.7%, bringing it nearly 9% below its record high established just a month prior. At one point during the day, the index was down by 3.6%, heading towards its most significant decline since 2022, a period marked by the highest inflation in decades that strained budgets and raised concerns about a potential recession that ultimately did not materialize.
The Dow Jones Industrial Average experienced a decline of 890 points, or 2.1%, after recovering from an earlier drop exceeding 1,100 points, while the Nasdaq composite decreased by 4%.
This marked the most challenging day in a troubling trend, as the S&P 500 has fluctuated by more than 1%—either up or down—on seven occasions within eight days, largely due to Trump’s inconsistent tariff policies. The prevailing concern is that these volatile movements may either directly harm the economy or generate sufficient uncertainty to push U.S. businesses and consumers into a state of economic paralysis.
The U.S. job market currently exhibits stable hiring trends, and the economy concluded the previous year on a robust note. However, economists are revising their projections for economic performance in the current year downward.
For instance, David Mericle of Goldman Sachs has adjusted his forecast for U.S. economic growth from 2.2% to 1.7% by the end of 2025, primarily due to anticipated increases in tariffs that exceed his earlier estimates.
He assesses a one-in-five probability of a recession occurring within the next year, a slight increase, noting that “the White House has the option to retract policy changes” should economic risks escalate.
Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley, remarked that while various factors influence the market, tariffs currently dominate the landscape.
In light of the market downturn, White House spokesperson Kush Desai highlighted that numerous companies have responded to President Trump’s “America First” economic strategy with “trillions in investment commitments that will generate thousands of jobs.”
On Monday, Trump convened with CEOs from the technology sector, although the meeting was not open to the press.
The concerns affecting Wall Street have disproportionately impacted some of its leading companies. Major technology stocks and firms that benefited from the artificial intelligence boom in recent years have experienced significant declines.
Nvidia saw a further drop of 5.1% bringing its year-to-date loss to over 20%, a stark contrast to its nearly 820% increase during 2023 and 2024.
Tesla, led by Elon Musk, fell by 15.4%, increasing its loss for 2025 to 45%. Initially buoyed by expectations that Musk’s close ties with Trump would benefit the electric vehicle manufacturer, the stock has since declined amid concerns that its brand is becoming too closely associated with Musk. Protests against the U.S. government’s workforce reduction efforts have also targeted Tesla dealerships, among others.
Stocks of companies that depend on U.S. households feeling good enough about their finances to spend also fell sharply. Cruise-ship operator Carnival dropped 7.6%, and United Airlines lost 6.3%.
It’s not just stocks struggling. Investors are sending prices lower for all kinds of investments whose momentum had earlier seemed nearly impossible to stop at times, such as bitcoin. The cryptocurrency’s value has dropped below $80,000 from more than $106,000 in December.
Instead, investors have bid up U.S. Treasury bonds as they look for things whose prices can hold up better when the economy is under pressure. That has sent prices for Treasurys sharply higher, which in turn has sent down their yields.
The yield on the 10-year Treasury tumbled again to 4.22% from 4.32% late Friday. It’s been dropping since January, when it was approaching 4.80%, as worries about the economy have grown. That’s a major move for the bond market.
All the uncertainty, though, hasn’t shut down dealmaking on Wall Street. Redfin’s stock jumped 67.9% after Rocket said it would buy the digital real estate brokerage in an all-stock deal valuing it at $1.75 billion. Rocket’s stock sank 15.3%.