Wall Street suffered a sharp sell-off on Monday (Tuesday AEDT), with mounting recession fears triggering a steep decline in major stock indices.
Investors grappled with uncertainty over tariff policies, fueling concerns about an economic slowdown - an outcome that United States President Donald Trump did not dismiss in a weekend interview.
The Dow Jones Industrial Average tumbled 890 points or 2.1%, settling at 41,911.7. The S&P 500 slid 155.6 points or 2.7% to close at 5,614.6, while the Nasdaq Composite plunged 727.9 points or 4%, marking its worst session since September 2022 and ending at 17,468.3.
High-growth tech stocks bore the brunt of the downturn, with the “Magnificent Seven” cohort leading the retreat.
Alphabet and Meta fell 4.6% and 4.4%, respectively, Apple shed 4.9%, while Nvidia lost 5.1%.
Tesla also extended its losing streak, with shares tumbling 15.4% on Monday - their worst single-day drop since September 2020.
Investor concerns have been mounting in recent weeks, initially triggered by soft economic data tied to ongoing tariff policy uncertainty. Fresh remarks from the White House exacerbated worries.
On Friday, Treasury Secretary Scott Bessent told CNBC that the economy might face a “detox period” as the new administration implements spending cuts.
President Trump, in a Sunday Fox News interview, described the current economic environment as a “period of transition” and stressed his focus on “building a strong country”.
Investor risk aversion was evident across markets. The Cboe Volatility Index (VIX), often referred to as Wall Street’s “fear gauge", surged to its highest level since December.
Defensive stocks managed to hold firm, with Mondelez and Johnson & Johnson eking out gains as investors shifted toward companies with stable revenues and dividend payouts.
On the bond markets, 10-year and 2-year rates were 2% and 2.8% lower at 4.219% and 3.889%, respectively.
