New York CNN —
US stocks plunged Monday, continuing a steep selloff driven by concerns about the impact of President Donald Trump’s tariffs on economic growth.
All three major indexes were sharply lower Monday after Trump said the US economy would see “a period of transition” and refused to rule out a recession, in an interview that aired Sunday.
When asked on Fox News’ “Sunday Morning Futures With Maria Bartiromo” if he was expecting a recession this year, Trump said “I hate to predict things like that. There is a period of transition because what we’re doing is very big.”
The Dow sank by more than 900 points, or 2.1%, Monday; the broader S&P 500 dropped by 2.8% and the tech-heavy Nasdaq Composite plummeted 4.3%.
Tech stocks were leading the selloff Monday, weighing on the S&P 500 and dragging the Nasdaq into correction territory. As of the afternoon, the S&P 500 was down 8.6% from its record high on February 19, and the Nasdaq was on track for its worst day since September 2022.
The “Magnificent Seven” of tech stocks — Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) — were all in the red on Monday, driving the broad selloff.
“President Trump’s comments not necessarily taking a recession off the table unnerved investors who were already unnerved,” said Anthony Saglimbene, chief market strategist at Ameriprise.
Tesla was down 13% on Monday. After the US presidential election in November, shares of Tesla surged. However, Tesla stock is down more than 43% this year, wiping out its gains since November.
The company’s shares have taken a massive hit in recent weeks amid protests against CEO Elon Musk for his oversized role in the Trump administration, as well as slumping sales in Europe.
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Nvidia fell 5% and Palantir (PLTR), another star of the artificial intelligence trade, slid 10%.
“When stocks overextend on the upside, they overextend on the downside,” said Gina Bolvin, president of Bolvin Wealth Management Group, in an email.
The VIX, Wall Street’s fear gauge, surged to its highest level this year. “Extreme fear” has been the sentiment driving markets for the past two weeks, according to CNN’s Fear and Greed Index.
“This uncertainty has been swirling in the market,” Saglimbene said.
Stocks have been hammered so far this month amid uncertainty around Trump’s on-again, off-again tariff policy. The S&P 500 slid 3.1% last week, posting its worst week since September.
Trump threatened a massive tariff on imports from Canada and Mexico but then announced a reprieve until April 2. He doubled the tariff on all Chinese imports to 20% from 10%, and a 25% tariff on all steel and aluminum imports is set to take effect March 12. In addition, Trump threatened last week to enact a 250% tariff on Canadian dairy products and a “tremendously high” tariff on its lumber. On Sunday he told Fox that tariffs may still “go up as time goes by.”
“The talk of tariffs is, in a lot of ways, worse than the implementation of them,” said David Bahnsen, chief investment officer at the Bahnsen Group. “The tariff talk, reversal, speculation, and chaos only fosters uncertainty.”
“I do not believe the administration knows how the tariff situation will play out, but if I were a betting man I would say that it will persist long enough to do damage to economic activity for at least a quarter or two, and ultimately result in a deal with different countries that make everyone wonder why we went through all the fuss,” he said in a note Monday.
And cracks are forming elsewhere: Layoffs are mounting, hiring is slowing, consumer confidence is eroding and inflation is picking up.
The yield on the 10-year US Treasury slid to 4.215% as investors snapped up government bonds, signaling concerns about uncertainty and economic growth.
Looking ahead this week, investors will be attuned to monthly inflation data expected on Wednesday and Thursday to gauge whether inflation remained stubborn in February.
A recession is commonly defined by two consecutive negative quarters of gross domestic product growth. The National Bureau of Economic Research’s Business Cycle Dating Committee, the official arbiters, says a recession “involves a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
“How long this period of investor caution persists depends on how quickly it will take the global trade clouds, and the resulting threat of recession, to dissipate,” said Sam Stovall, chief investment strategist at CFRA Research, in a note Monday.
This is a developing story and will be updated.
