The U.S. stock market has lost about $5 trillion in value over the past three weeks. The S&P 500’s peak value was $52.06 trillion on February 19. As of Thursday, it had dropped to $46.78 trillion.
This is a total loss of around $5.28 trillion. The downturn shows a big correction, which is a 10% decline from a recent high.
Various economic and policy concerns drive it. There are increasing worries about ongoing trade tensions and tariffs involving the United States and its major trading partners. Signs of slowing economic growth and weak consumer sentiment surveys have also contributed to the downward trend.
Barclays strategist Emmanuel Cau said, “Our interactions with clients indicate that the mood music is changing. While many see recession talk as premature, concerns about erratic policy from the new administration abound, with the ‘uncertainty tax‘ hitting growth expectations.
Another big factor seems to be the unwinding of the growth trade related to artificial intelligence (AI). Since February 19, Nvidia’s stock has declined by 17%.
The Roundhill Magnificent Seven ETF has fallen 16%—the sharp run-up in AI-related stocks before the market correction raised concerns about overvaluation. Several stocks had market caps above $3 trillion at their peaks.
Despite the recent losses, the S&P 500 still trades at 24.1 times its trailing 12-month earnings, which remains above its long-term average. On Tuesday, the Dow Jones Industrial Average fell sharply by 478 points, or 1.1%.
It closed at 41,433 as investors grappled with ongoing trade tensions and tariff uncertainties involving President Trump and Canada. This marked the second day in a row of big losses on Wall Street. Twenty-four of the Dow’s 30 components closed in the red.
Art Hogan, chief market strategist at B. Riley Wealth, said, “Unless and until we know where the goalposts actually are on trade and tariffs, this uncertainty will continue to weigh on markets.”
Volatility dominated the session. It was made worse by a series of tariff announcements.
Sectors such as energy and manufacturing were especially hard-hit. This happened after President Trump reduced tariffs on steel and aluminum imports from Canada to 50%. This decision came in response to Ontario’s announcement of a 25% surcharge.
The surcharge was partially walked back later. The S&P 500 also experienced losses. It dropped 42 points, or 0.8%, to finish at 5,572.
At one point, the index was 10% below its record high from last month. Dan Greenhaus, chief strategist at Solus Alternative Asset Management, said, “Ten percent declines happen more than people think.” He highlighted that this drop follows a six-month rally. The Nasdaq Composite was unable to stay in positive territory.
It closed down 32 points, or 0.2%, at 17,436. President Trump announced plans to substantially increase other tariffs on Canada by April 2 if there was no rollback on tariffs affecting U.S. dairy products and other goods, further contributing to investor anxiety.
The escalating trade tensions have rippled across various sectors. Shares of Stellantis, the parent company of Jeep and Dodge with several production plants in Canada, dropped significantly as the market braced for potential fallout.
Market turmoil due to tariffs
“The market has been down for three weeks in a row, largely driven by uncertainty about where trade policy lands,” Hogan remarked. Greenhaus added, “We have to wait until April 2 to learn about possible reciprocal actions, which could worsen the situation.”
The ongoing sell-off came alongside Citigroup strategists and other financial institutions like JPMorgan Chase downgrading their outlook on U.S. equities. The technology-heavy Nasdaq saw its worst performance since September 2022.
The Dow closed below its 200-day moving average for the first time since late 2023. In a recent interview with Fox News, President Trump declined to predict a potential recession. He stated, “I hate to predict things like that.
There is a period of transition because what we’re doing is very big.”
Delta Air Lines revised its earnings outlook downward, citing weaker U.S. demand. This compounded economic concerns. The United States stock market has shed more than $1.75 trillion in value following recent comments by President Donald Trump.
His comments signaled fears of an impending recession. The tech-heavy Nasdaq 100 plunged 3.81 percent, marking its steepest single-day loss since September 2022. This major downturn has been echoed across various markets.
The S&P 500 tumbled 2.7 percent, dragging the index nearly 9 percent below its all-time high reached on February 19. Tesla, the electric car company run by Elon Musk, saw one of the steepest declines among individual firms. It plunged 15.43 percent.
Asian stock markets also suffered. Japan’s Nikkei 225 and Taiwan’s TAIEX dropped more than 2.5 percent. Hong Kong’s Hang Seng slid about 1.5 percent.
Trump’s controversial tariff announcements have driven the market turmoil. They have unsettled investors and stoked fears of a major economic slowdown or recession. In an interview with Fox News, Trump left open the possibility of a downturn.
He stated, “I hate to predict things like that. There is a transition period–we’re bringing wealth back to America.
That’s a big thing… It takes a little time, but I think it should be great for us.”
The uncertainty has led to heightened volatility in the markets. Steve Okun, founder and CEO of APAC Advisors in Singapore, said, “[Trump] has no credibility right now regarding tariffs because of what he has done, particularly with Mexico and Canada. That’s why the markets are reacting like they are – they don’t know what will happen.”
Last week, Trump imposed a 25 percent tariff on imports from Mexico and Canada.
He also doubled the rate of duties on Chinese goods to 20 percent. These policies have led some economists to predict a higher chance of recession. Goldman Sachs economists last week raised their odds of a recession within the next 12 months from 15 percent to 20 percent.
JPMorgan Chase increased the probability from 30 percent to 40 percent. Peter Tuchman, a New York Stock Exchange trader, described Monday’s trading session as a “bloodbath.” He said, “These stocks are being eaten away, and this is obviously all over the fear of a recession. Last week was a roller coaster of up and down days, all a function of the indecisiveness, confusion, and mixed messaging coming out of the Oval Office.”
Democratic Senator Elizabeth Warren of Massachusetts blamed Trump’s policies for jeopardizing the economy.
She said, “We’re in real economic trouble thanks to the President, and the stock market is a flashing warning light right now.”
Republican Senator Rand Paul of Kentucky expressed similar concern. He said, “The stock market comprises millions of people simultaneously trading. The market indexes are a distillation of sentiment.
When the markets tumble like this in response to tariffs, it pays to listen.”
However, the head of Trump’s National Economic Council, Kevin Hassett, played down the concerns. He called them “blips in the data.” In an interview with CNBC, Hassett said, “What I think that what’s going to happen is the first quarter is going to squeak into the positive category, and then the second quarter is going to take off as everybody sees the reality of the tax cuts.”
The markets remain in flux as investors navigate an environment of uncertainty and mixed economic policies.
Photo by; Christine Roy on Unsplash
