us stocks plunge as fears grow over economic slowdown news

"us stocks plunge as fears grow over economic slowdown news"

US stocks took a significant hit on Monday as concerns about an economic slowdown intensified, especially after President Donald Trump suggested that his tariffs could potentially lead to a recession.

The Nasdaq experienced a sharp decline of 4.0% by the end of the trading day, marking its biggest single-day drop since 2022. Other markets also faced substantial losses, with technology stocks suffering the most.

Tesla's shares plummeted by approximately 15.4%, while chipmaker Nvidia saw a decrease of over 5%. Major tech companies like Meta, Amazon, and Alphabet also experienced notable declines.

The S&P 500 Index fell by 2.7%, and the Dow Jones Industrial Average decreased by 2.1%.

Trump's remarks came in response to questions about worries regarding a possible recession, stating that the US economy is currently undergoing a transition.

In an interview with Fox News that aired on Sunday but was recorded on Thursday, Trump seemed to recognize these concerns. "I don't like to make predictions like that," he mentioned. "We are in a transition period because what we're doing is significant. We're bringing wealth back to America, and that's a major achievement."

Since that interview, the president has not made further comments about the economy, but his senior officials and advisors have been working to ease concerns.

As stocks dipped, Trump highlighted the ongoing "transition" of the US economy. He also announced expanded exemptions from tariffs on Canada and Mexico. After the market closed on Monday, a White House official informed reporters, "There's a noticeable difference between the optimistic sentiment in the stock market and the realities that businesses and their leaders are experiencing."

"This latter perspective is clearly more important for understanding the economy's medium to long-term outlook," the official continued.

Later that day, White House spokesperson Kush Desai noted that "industry leaders" have reacted positively to Trump's policies, including tariffs, with commitments amounting to trillions in investments.

Despite this, economic analysts are increasingly concerned that growth may decelerate and prices could rise.

Last week, major US markets fell back to levels seen before Trump's election victory last November, which had initially sparked investor optimism due to anticipated tax cuts and reduced regulations.

Investors are worried that Trump's tariffs—taxes on imported goods—will result in higher prices and ultimately hinder growth in the largest economy in the world.

Rachel Winter, an investment manager at Killik & Co, expressed her concerns on the Today programme, stating, "The level of tariffs that Trump is imposing will undoubtedly lead to inflation at some point."

The president announced new measures after blaming China, Mexico, and Canada for not doing enough to curb the influx of illegal drugs and migrants into the United States. The three nations have denied these claims.

Tesla's declining stock price is associated with uncertainty surrounding the proposed tariffs, which could negatively impact Canada and Mexico, both vital markets for automotive parts. Increased tariffs might lead to higher production costs and elevated prices.

Economist Mohamed El-Erian noted that investors were initially hopeful about Trump's plans for deregulation and tax cuts, while underestimating the potential for a trade conflict.

He mentioned that the recent downturn in the stock market, which began last week, reflects a shift in those expectations.

"It's a total turnaround from what the market anticipated," he remarked, adding that investors are also reacting to indications that businesses and consumers are beginning to hold back on spending due to uncertainty, which could hinder economic growth.

However, Kevin Hassett, an economic advisor to President Trump, has countered the pessimistic forecasts.

In a CNBC interview, Hassett expressed that there are numerous reasons to feel positive about the US economy and that the tariffs on Canada, Mexico, and China are already fostering manufacturing and job creation in the United States.

"There are plenty of reasons to be very optimistic about the economy moving forward," he stated.

He acknowledged some "blips in the data" for this quarter, attributing them to the timing of Trump's tariffs and the "Biden inheritance."