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U.S. stock markets faced considerable downturns on Monday, continuing the downward trend that began the previous week.
This latest decline comes in the wake of President Trump’s remarks regarding the economy, which he described as entering a “period of transition” due to his assertive trade policies.
He indicated that a recession cannot be ruled out this year, adding to investor anxiety.
The trade tensions between the United States and China escalated further on Monday, with Beijing implementing retaliatory tariffs on an array of American agricultural products—significantly affecting the U.S. farming sector that heavily relies on China as its largest market.
Tariffs imposed include a 15% levy on chicken, wheat, and corn, alongside a 10% tax on soybeans, pork, beef, and various fruits.
Nasdaq Index Approaching Correction Territory
The S&P 500 index fell by 2%, marking potentially its worst trading day this year and pushing it down over 8% from a record high established in February.
This decline nears the technical definition of a “correction,” generally understood as a drop of 10% or more.
Last week, the index recorded a 3.1% decline, its poorest weekly performance since September.
Notably, the tech-focused Nasdaq index suffered even greater losses. Following a week that saw it enter correction territory, it dropped more than 3% on Monday.
Major tech stocks were hit hard, with Tesla falling more than 8% and Alphabet, Apple, and Nvidia all experiencing declines exceeding 4%.
The Dow Jones Industrial Average also faced a setback, losing 470 points, which equated to a 1.1% decrease, settling at 42,332.
Markets overseas in Asia and Europe also experienced losses, albeit not as severe as those in the U.S.
The dip in Wall Street came on the heels of President Trump’s vague comments about the possibility of a recession.
In an interview with Fox News, he remarked, “I hate to predict things like that. There is a period of transition, because what we’re doing is very big.”
Contrarily, Commerce Secretary Howard Lutnick assured that there is no immediate reason to anticipate a recession.
Downgraded Economic Growth Forecasts
Goldman Sachs announced a revision to its economic growth projection for 2025, reducing it from 2.4% to 1.7%.
This downgrade reflects the intensified economic headwinds resulting from the current administration’s trade policies.
Chief economist Jan Hatzius reported in a note to clients that they now foresee the average U.S. tariff rate rising by 10 percentage points this year—significantly above previous predictions and roughly five times higher than increases observed during Trump’s first term.
Last week, the administration enacted 25% tariffs on imports from Canada and Mexico, although it subsequently suspended these tariffs for goods covered under the U.S.-Mexico-Canada Agreement (USMCA).
The White House maintains its confidence that tax cuts and tariff revenues will strengthen the economy, even as investor sentiment reacts negatively to the largest market decline since Trump’s reelection four months ago.
As the S&P 500 continues its descent from February’s highs, analysts are warning about ongoing stock market volatility linked to uncertainties surrounding U.S. trade policy, tariffs, and inflation.
Some economists predict inflation rates may rise this year, prompting economists at Morgan Stanley Research and Goldman Sachs to recently increase their inflation forecasts.
John Canavan, lead U.S. analyst at Oxford Economics, stated, “The risks of higher inflation … have taken a back seat in the overall market view recently, as the risks of slower economic growth have shifted to the forefront.”
The White House’s commitment to reducing taxes and regulatory burdens aims to revitalize American manufacturing and create jobs; however, the long-term effects of President Trump’s policies remain uncertain.
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