Investor concerns over President Donald Trump’s policies continue to impact Wall Street stocks, with the S&P 500 index falling 1.6% on Monday. This decline follows a 3.1% drop last week, marking the worst weekly performance in six months. Big US banks have revised their bullish forecasts for stocks this year, contributing to the overall negative sentiment in the market.
The Nasdaq Composite, which has been struggling due to a sell-off in tech stocks, was down 2.5%, with Tesla experiencing a nearly 8% decline. The electric carmaker’s shares, which surged after Trump’s election victory, have now lost more than 50% of their value since reaching a peak in December.
Trump’s recent comments on a potential recession and inflation, as well as the lack of clarity on tariff plans, have further fueled uncertainty among investors. Paul Donovan, chief economist at UBS Global Wealth Management, noted that Trump’s tariff policy has been unpredictable, impacting global growth and trade.
As a result of these concerns, investors are turning to safe-haven assets like US Treasuries, causing the 10-year yield to drop to 4.23%. Treasury Secretary Scott Bessent’s acknowledgment of signs of US economic weakness has done little to reassure worried investors.
The recent market downturn represents a stark contrast to the optimism seen late last year and early this year, driven by hopes of deregulation and tax cuts under the Trump administration. Instead, trade tensions with key partners like Canada, Mexico, China, and the EU have led to a more cautious approach from investors.
Analysts at Morgan Stanley and JPMorgan have warned of further potential declines in the S&P 500 index if economic growth falters and recession becomes likely. JPMorgan predicts a near-10% drop to 5,200 points, while Citi believes Trump’s policies could push the index down to 5,500 points.
In Europe, the Stoxx Europe 600 index fell 0.7%, with Germany’s Dax dropping 1.1% after hitting record highs last week. Chinese consumer prices also fell in February for the first time in 13 months, indicating weakness in the world’s second-largest economy.
Overall, the uncertain economic and policy landscape continues to weigh on global markets, with investors bracing for further volatility in the days ahead.
