Stocks Plummet Amid Recession Concerns Linked to Trump's Comments

Major stock indexes experienced a sharp decline on Monday, following a sell-off that began to intensify the previous week. Investors are becoming increasingly worried about a substantial slowdown in the U.S. economy, driven by ongoing inflation and a shaky job market.

The S&P 500 index fell by as much as 2.4% on Monday, erasing all the gains made since President Donald Trump's election. Currently, the index is at its lowest point since September, showing little change over the last seven months.

The Nasdaq, known for its tech-heavy listings, dropped nearly 4%, entering what is referred to as "correction" territory. The Dow Jones Industrial Average lost almost 650 points, equating to a 1.5% decline.

Concerns over a potential recession heightened after Trump commented over the weekend, choosing not to dismiss recession risks. In an interview with Fox News aired on Sunday, he noted that the economy is in a "period of transition" when asked about the recession possibility.

A wide array of major companies saw their stock prices tumble on Monday. Nvidia, a key player in the AI market that has driven stock gains in recent years, fell over 4%, marking a 22% decline year-to-date. Notable tech companies such as Apple, Microsoft, and Tesla also suffered significant losses, with Tesla’s stock dropping more than 10%. The electric vehicle manufacturer has relinquished all of its stock gains since the election as CEO Elon Musk has increasingly been associated with Trump’s administration.

Prior to the recent discourse surrounding protests against Musk and Tesla, the company was already facing declining sales in Europe and particularly in China, which is its most crucial market. The protests have largely stemmed from Musk’s involvement in Trump's initiatives.

Cryptocurrency markets also faced challenges on Monday, with Bitcoin prices falling below $80,000 for the first time since Trump's election, despite the White House's recent crypto summit aimed at creating a "strategic bitcoin reserve." Some investors were left unsatisfied with the summit's outcomes.

Shares of Coinbase, the largest cryptocurrency exchange in the U.S., fell by 10%, erasing its gains since the election as well.

Investor sentiment is fraught with uncertainty regarding Trump's often erratic economic policies. The president has inconsistently implemented tariffs on major trading partners while also collaborating with Musk on sweeping cuts to federal employment, which threaten to further destabilize an already precarious job market.

Sam Stovall, chief investment strategist at CFRA Research, commented, "We are in the throes of a manufactured correction. I mean manufactured because it’s really a response to the new administration’s tariff strategies and their impact on the economy." He added that many traders might be locking in profits after a period of all-time highs under the previous administration.

“Currently, we are experiencing a normal pullback and can expect a mild correction before this phase is over, which may actually rejuvenate the ongoing bull market,” he stated.

stocks, economy, recession