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By Lewis Krauskopf
NEW YORK (Reuters) – Fears that uncertainty over commerce tariffs will spark an financial downturn are inflicting traders to flee equities, in a significant shift for Wall Avenue which had been fired-up by the prospect of President Donald Trump’s agenda.
Shares continued their steep decline on Monday, with the benchmark S&P 500 down 2% in mid-day commerce and the Nasdaq Composite sliding greater than 3%. The S&P 500 was down about 8% from its February 19 all-time excessive, nearing a ten% decline that may present a correction for the index. The tech-heavy Nasdaq ended down greater than 10% from its December excessive final week.
The S&P 500 tallied back-to-back beneficial properties of over 20% in 2023 and 2024, led by megacap know-how and tech-related shares comparable to Nvidia and Tesla which have struggled thus far in 2025 and dragged main indexes down with them.
“We have seen clearly a giant sentiment shift,” mentioned Ayako Yoshioka, senior funding strategist at Wealth Enhancement.
“Quite a lot of what has labored shouldn’t be working now.”
Traders are grappling with a barrage of latest insurance policies from the brand new Trump administration, notably in commerce the place backwards and forwards on tariff coverage has elevated uncertainty for companies, customers and traders.
Trump over the weekend declined to foretell whether or not the U.S. may face a recession amid inventory market considerations about his tariff actions on Mexico, Canada and China.
“The Trump administration appears a bit of extra accepting of the concept that they’re OK with the market falling, they usually’re doubtlessly even OK with a recession with a purpose to precise their broader objectives,” mentioned Ross Mayfield, funding strategist at Baird. “I feel that is a giant get up name for Wall Avenue.”
The S&P 500 has given up all of its beneficial properties since Trump’s November 5 election, and is now down greater than 2% in that point. Traders had expressed optimism that Trump’s anticipated pro-growth agenda together with tax cuts and deregulation would profit shares, however uncertainty over tariffs and different modifications together with federal workforce cuts, have dampened sentiment.
INVESTOR UNEASE
“It was the overwhelming consensus that every thing was going to be this nice surroundings as soon as President Trump got here into workplace,” mentioned Michael O’Rourke, chief market strategist at JonesTrading.
“Each time you’ve structural change you are going to have uncertainty and you are going to have friction,” O’Rourke mentioned. “It is comprehensible persons are beginning to be a bit of involved and beginning to take income.”
