US Stocks Drop Amid Trump Tariffs, Recession Fears Surge

US stocks plunged Monday, with all three major indexes posting significant losses as concerns over President Donald Trump’s economic policies triggered a broad market selloff.

The Dow Jones Industrial Average closed down 890 points, or 2.08%, after plummeting more than 1,100 points earlier in the session. The S&P 500 dropped 2.7%, while the Nasdaq Composite sank 4%, marking its worst single-day loss since September 2022. The declines erased all gains from the November presidential election.

Investor anxiety over Trump’s tariff policies fueled the selloff. In an interview aired Sunday, Trump referred to an economic “period of transition” and did not rule out the possibility of a recession. “I hate to predict things like that”, he said. “There is a period of transition because what we are doing is very big.”

Technology stocks bore the brunt of the downturn, pushing the Nasdaq into correction territory. The “Magnificent Seven” tech giants—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—all closed lower. Nvidia fell 5%, while Palantir dropped 10%.

Tesla shares tumbled 15.4%, wiping out post-election gains. The stock has plummeted nearly 45% this year, driven by concerns over its connections to the Trump administration and slowing sales in Europe.

The Cboe Volatility Index (VIX), Wall Street’s “fear gauge,” surged to its highest level of the year, while CNN’s Fear and Greed Index indicated “extreme fear” among investors.

Market volatility has intensified this month amid shifting tariff policies. Last week, the S&P 500 fell 3.1%, its worst performance since September. Trump recently announced a temporary suspension of tariffs for Canada and Mexico until Apr. 2, while doubling tariffs on Chinese imports to 20%. A 25% tariff on steel and aluminum imports is set to take effect on Mar. 12. Trump also floated a 250% tariff on Canadian dairy products and additional tariffs on lumber imports.

“The stock market is losing confidence in Trump 2.0 policies,” said Ed Yardeni, President , Yardeni Research.

Economists have warned that uncertainty surrounding trade policies could weigh on economic activity for several quarters. “The constant tariff talk, reversals, speculation, and chaos only breed uncertainty,” said David Bahnsen, Chief Investment Officer, Bahnsen Group, in an interview with CNN.