It was the worst day in a horrifying stretch that rocked more than 1% in eight days and more than 1% up and down due to tariffs when the S&P 500 was on or off. The worry is that whip saw movements directly hurt the economy or create enough uncertainty to lead American businesses and consumers to economically unparalysis.
The economy has already given some signals of weakness, primarily through research showing an increase in pessimism. And a widespread collection of real-time metrics compiled by the Federal Reserve Bank of Atlanta suggests that the US economy may already be shrinking.
Asked over the weekend if he was hoping for a recession in 2025, Trump told the Fox News Channel: “I don't want to predict such things. We're doing so much, so there's a transition period. We're bringing wealth back to America. That's a big deal,” he added. “It's going to take a little time. It's going to take a little time.”
Trump says he wants to take his manufacturing job back to the US, among other reasons he was given for tariffs. His Treasury Secretary, Scott Bescent, also said the economy may go through a period of “detox” in escaping government reliance on spending. The White House is trying to limit federal spending, but is attempting to cut federal workforce and increase deportation that could hinder the job market.
The US job market certainly shows stable employment at this point, with the economy running at a solid speed last year. But economists have marked forecasts on how the economy will function this year.
At Goldman Sachs, for example, David Merrick reduced US economic growth estimates to 1.7% from 2.2% in 2025 at the end of the previous year.
He sees five opportunities for recession over the next year and has raised it slightly as “the White House has the option to recapture policy changes” if the risks to the economy begin to “become more serious.”
“There are always multiple units in the market, but now almost all of them take back seats at the tariffs,” said Chris Larkin, managing director of trading and investments at e-Trade at Morgan Stanley.
In response to the market sale, White House spokesman Kush Desai noted that many companies responded to Trump's “America-First” economic agenda with “signs of investment commitments that create thousands of jobs.”
Trump met with the tech industry CEO on Monday, but the event was shut down by news media.
Worries about hitting Wall Street have hurt some of the biggest stars ever. In recent years, large-scale high-tech stocks and companies that have been riding the artificial intelligence frenzy have fallen sharply.
Nvidia fell another 5.1% on Monday, bringing its previous year losses to over 20%. This is a sudden drop from the nearly 820% surge over 2023 and 2024.
Elon Musk's Tesla fell 15.4%, deepening its loss of 45% from 2025. After getting the bump after the first election in hopes that Musk and Trump's close ties would help the electric vehicle company, the stock fell into concern that the brand was entangled with Mask. For example, protests against the US government's efforts to cull its workforce and other moves have targeted Tesla dealers.
Stocks of companies that rely on US households have also decreased significantly to feel good enough about their finances. Cruiseship operator Carnival fell 7.6%, while United Airlines lost 6.3%.
It's not just stock that we struggle with. Investors are lowering prices for all kinds of investments that sometimes halts, such as Bitcoin, have previously gained momentum. The value of cryptocurrency is below $80,000, from over $106,000 in December.
Instead, investors bid on US Treasury bonds as they were looking for something that could raise prices when the economy is under pressure. This has resulted in a sharp increase in prices for Treasurys, resulting in a reduced yield.
The 2010 Treasury yield fell again to 4.22% from 4.32% in the second half on Friday. The economy has grown, and it has fallen since January, when January was approaching 4.80%. That's a big move for the bond market.
But all uncertainty has not stopped trading on Wall Street. Redfin's shares rose 67.9% after Rocket said it would buy digital real estate brokerage in all-stock deals valued at $1.75 billion. Rocket's stock sank 15.3%.
ServiceNow fell 7.9% after AI platform companies said they were buying Ai-Assistant Maker MoveWorks with $2.85 billion in cash and stock.
The S&P 500 fell 155.64 points to 5,614.56. The Dow Jones industrial average reduced 890.01 to 41,911.71, while the Nasdaq composite sank to 727.90 to 17,468.32.
In overseas stock markets, the European index has declined largely after mixed sessions in Asia.
Hong Kong's index fell 1.8% and Shanghai's 0.2% after China said its consumer prices had fallen for the first time in 13 months. This is the latest weakness signal for the world's second largest economy. This is because early timing of New Year's holidays has worsened sustained weak demand.
AP business writers Matt Ott, Elaine Kurtenbach and Josh Boak contributed.
