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Wall Street faced a sharp decline on Monday, with major indexes tumbling as investor concerns over U.S. President Donald Trump’s trade policies intensified. Trump’s weekend remarks sparked renewed fears of a potential economic slowdown, leading to a market-wide selloff, particularly in the technology and banking sectors.
Nasdaq Leads the Market Selloff
The Nasdaq Composite led the downturn, falling nearly 4% to a six-month low. The Dow Jones Industrial Average dropped 323.95 points, or 0.76%, to settle at 42,477.77. The S&P 500 shed 114.16 points, or 1.99%, to close at 5,656.04, while the Nasdaq Composite lost 665.79 points, or 3.66%, ending at 17,530.43.
Tesla Stock Hits New Low Following UBS Forecast Cut
Tesla saw a steep 7% decline, hitting its lowest point since November 5, following UBS’s downward revision of its first-quarter delivery forecast. The investment firm also slashed its price target for Tesla, further pressuring the EV maker’s stock.
Technology Sector and Banks Face Heavy Losses
The technology sector experienced the largest drop among S&P 500 sectors, plummeting by 2.6%. In the banking sector, JPMorgan Chase and Goldman Sachs each lost over 3%, dragging the broader banks index down.
Trump’s Trade Policies Shake Market Confidence
In a Sunday interview, Trump declined to comment on whether the U.S. could enter a recession, exacerbating investor concerns. Market analysts have pointed to his shifting trade stances on Mexico, Canada, and China as potential threats to consumer spending and corporate investment.
China’s retaliatory tariffs on certain U.S. imports took effect on Monday, with U.S. tariffs on select base metals expected later this week. According to Art Hogan, chief market strategist at B. Riley Wealth, “It’s been a very rough patch for markets, all centered around uncertainty over tariffs,” reported by Business Standard.
A Reuters poll found that 91% of economists believe the risk of a U.S. recession has increased due to Trump’s unpredictable trade policies. HSBC also downgraded U.S. stocks, citing the tariff-related uncertainty.
Markets Face Their Worst Drop Since September
The S&P 500 recorded its steepest weekly decline since September, with the Nasdaq now down more than 10% from its December high, placing it on track for a correction. Since last week, the CBOE Volatility Index has reached levels unseen since December, indicating rising investor anxiety.
Economic Data and Federal Reserve Outlook
Key economic data, including reports on inflation, job openings, and consumer confidence, are due later this week. Federal Reserve Chair Jerome Powell’s recent statement that the economy remains strong provided some relief to investors. However, Powell also cautioned against premature interest rate cuts, underscoring the need for a careful approach.
The Federal Open Market Committee is set to meet next week, with traders expecting interest rates to remain unchanged through the first half of the year, according to LSEG data.
Chinese Stocks and Crypto Take a Hit
U.S.-listed Chinese stocks also suffered, with Alibaba falling 3.1% and Bilibili losing 5%, following data indicating ongoing economic struggles in China.
Meanwhile, cryptocurrency-related stocks faced steep declines. MicroStrategy slid 10%, Coinbase dropped 9%, and Riot fell 5.2%, tracking lower Bitcoin prices.
Market Breadth and New Highs & Lows
Declining stocks outnumbered advancing ones by a ratio of 2.83-to-1 on the NYSE, while the Nasdaq saw a decline-to-advance ratio of 2.98-to-1. The S&P 500 posted three new 52-week highs and one new low, whereas the Nasdaq Composite recorded 10 new highs and 40 new lows.
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