The U.S. stock market has taken a significant hit in recent weeks. Investors are growing increasingly concerned about the impact of President Trump’s economic policies. On Thursday, the S&P 500 fell into a correction.
This means it has dropped 10% or more from its recent peak. The index is now down 10.1% from the high it reached less than a month ago. Other major indexes have also fallen into correction territory.
The tech-heavy Nasdaq Composite fell 2% on Thursday. The Russell 2000 index of smaller companies dropped 1.6%. Investors worry that uncertainty around Trump’s policies is causing consumers to spend less.
They fear it may also discourage businesses from investing. This could potentially drive the economy into a recession. “I think what markets are telling us is that they are very concerned about the potential for a recession,” said Kristina Hooper, chief global market strategist at Invesco.
“That is certainly not what markets expected going into 2025.”
The market downturn follows a month of volatility driven by uncertainty surrounding Trump’s tariff policy. In a recent interview, Trump suggested the U.S. economy might undergo “a period of transition.” He did not rule out the possibility of a recession.
Stock market faces uncertainty
Tech stocks have been notably impacted. Giants like Alphabet, Amazon, Microsoft, Nvidia, and Tesla all ended in the red on Monday. Tesla experienced a significant drop of 15.4%, erasing all its post-election gains.
Wall Street’s VIX, a key measure of market volatility, surged to its highest level this year. This reflects extreme fear among investors. Bitcoin also took a hit, sliding to its lowest level since November.
The anxiety extended beyond stocks. The yield on the 10-year U.S. Treasury fell to 4.225% as investors moved towards safer assets like government bonds. Economic indicators such as layoffs, slowing hiring, eroding consumer confidence, and rising inflation further contributed to market jitters.
In just three weeks, the U.S. stock market has lost $5 trillion in value. The S&P 500, which peaked at $52.06 trillion market value on February 19, has now dropped to $46.78 trillion. Analysts emphasize the need for caution as the market adjusts to these new conditions.
They note that the duration of investor unease largely depends on resolving global trade uncertainties and the recession threat. As markets react to these developments, it remains to be seen how quickly stability can return. Investors are keeping a close watch on upcoming economic data to gauge the future direction of the market.
Photo by; Eddie Blair on Unsplash
