The major U.S. stock indexes plummeted on Monday following U.S. President Donald Trump’s refusal to predict whether his tariff policies could trigger a recession, unsettling investor confidence. The Nasdaq Composite fell by more than 3%, extending its retreat from the record high in December, while the S&P 500 dropped 2%, sliding nearly 8% from its all-time high in late February. Market analysts and investors weighed in on the sharp sell-off, highlighting concerns over global trade tensions, uncertain economic outlooks, and the potential fallout from Trump’s policies.
Dan Coatsworth, an investment analyst at AJ Bell in London, noted that the U.S. market sell-off is becoming increasingly concerning. He pointed out that the combination of trade war fears, geopolitical tensions, and uncertainty about the economic outlook may serve as the catalyst for a market correction. Coatsworth emphasized that while Trump was once viewed as a pro-market leader, his actions are now being seen as a harbinger of economic trouble. “The R word is back on everyone’s lips,” he remarked, as investors speculate whether tariffs could lead to a recession rather than prosperity. Coatsworth added that Trump, who often tied his success to the rising stock market during his first term, will likely work to avoid a full-blown market crash during his second term.
Michael O’Rourke, chief market strategist at JonesTrading, commented on the broader sentiment shift. He noted that there were high expectations after Trump’s election, but much of that optimism was misplaced. O’Rourke explained that Trump’s push for structural change has introduced significant uncertainty, which naturally comes with friction and investor concern. He also highlighted the growing appeal of investing outside the U.S., where valuations are lower and exposure to U.S. risks can be reduced. O’Rourke emphasized that the U.S. market’s exceptional performance in recent years may be experiencing a correction as investors explore opportunities elsewhere.
Idanna Appio, a portfolio manager at First Eagle Investment Management, echoed these concerns, stating that the pressure on U.S. assets reflects heightened uncertainty about U.S. policy. This uncertainty, she explained, makes it difficult for businesses to make investment decisions, as they are unsure of the direction of future policy. Appio noted that while similar concerns existed in 2018 and 2019, the current situation is more extreme due to the sheer number of overlapping challenges. Jamie Cox, managing partner at the Harris Financial Group, added that the market’s anxiety is partly driven by concerns over the debt ceiling, which is manifesting as a growth scare. “The irony is that sentiment is so bad now that markets will likely turn positive at the hint of anything positive,” Cox remarked, suggesting that even modest positive developments could stabilize the market.
Ross Mayfield, an investment strategist at Baird, offered a different perspective, noting that the Trump administration appears more accepting of the idea that market declines and even a recession may be a necessary cost of achieving its broader policy goals. This, he said, is a wake-up call for Wall Street, as there had been a belief that Trump’s success was closely tied to the stock market’s performance—a concept some referred to as the “Trump put.” Mayfield also touched on the tech sector, which has seen significant declines due to its high valuations and vulnerability to risk sentiment. He advised investors to consider buying high-quality growth companies on the dip but also suggested reevaluating the preference for U.S. stocks over international ones, as other regions like China and Europe have outperformed amid U.S. pressure on foreign governments.
The sell-off also reflects a broader sentiment shift, according to Ayako Yoshioka, a senior investment strategist at Wealth Enhancement Group. She noted that growth stocks, which had led the market for years, are now experiencing sharp declines, leading investors to take profits. Art Hogan, chief market strategist at B. Riley Wealth, added that the constant shifts in the narrative around tariffs are driving market uncertainty, particularly in the Nasdaq, where technology stocks are more sensitive to risk sentiment. Chris Zaccarelli, chief investment officer at Northlight Asset Management, echoed this, stating that the Nasdaq’s correction is a continuation of trends seen earlier in the year, with high valuations compounded by increasing uncertainty. Meanwhile, Thomas Hayes, chairman of Great Hill Capital, suggested that the market’s troubles are linked to global macroeconomic factors, such as the unwinding of the carry trade, rather than just U.S. policy. Overall, the U.S. market is navigating a complex landscape of policy uncertainty, trade tensions, and shifting investor sentiment, leaving many experts cautious about the near-term outlook.
