US stocks took a sharp dive on Monday as growing fears of a potential recession shook investor confidence. The downturn followed comments from President Donald Trump, who, in a Fox News interview, declined to rule out the possibility of a recession this year amidst his ongoing tariff policies.
By the close of trading, the Dow Jones Industrial Average had dropped 2.08%, the S&P 500 fell 2.70%, and the Nasdaq Composite Index tumbled by a significant 4%. Tech giants were among the hardest hit, with Tesla plunging more than 15%. Semiconductor companies like ASML and Micron Technology each fell over 6%, while Nvidia lost more than 5%.
Market analysts are warning that the administration’s approach could have deeper implications for investor sentiment. Ross Mayfield, an investment strategist at Baird in Louisville, Kentucky, told Reuters that President Trump’s recent comments indicate a willingness to tolerate market downturns in pursuit of policy goals. “It’s a big wake-up call for Wall Street,” Mayfield noted, highlighting a stark shift from previous assumptions that the administration would prioritize stock market stability.
Adding to the economic concerns, major financial institutions have revised their US growth forecasts downward. Last Friday, Morgan Stanley lowered its projections for US economic growth in 2025 from 1.9% to 1.5%, and adjusted estimates for 2026 from 1.3% to 1.2%. On Monday, Goldman Sachs also cut its 2025 US GDP growth forecast from 2.4% to 1.7%.
Rich Privorotsky, head of European One Delta Trading at Goldman Sachs, emphasized that current US policies are weighing heavily on consumer confidence and shaking trust in equity markets. He also pointed to uncertainty in the field of artificial intelligence investments, especially considering China’s growing influence in the sector.
Trade tensions escalated further as Canadian provinces announced retaliatory measures against US tariffs. British Columbia Premier David Eby declared that all US-made alcoholic beverages would be removed from the province’s liquor stores. Meanwhile, Ontario imposed a 25% tax hike on electricity exports to the US.
Peter Berezin of BCA Research highlighted the differing economic attitudes between the US and Canada, stating on X, “Americans have very little tolerance for any economic pain; whereas Canadians are willing to put up with a lot to repel an unjust attack.”
As markets react to these developments, investors worldwide are keeping a close eye on the unfolding economic landscape, bracing for potential challenges ahead.
