Wall Street Hit by Fears of Economic Slowdown as Trump Policies Raise Recession Concerns

Wall Street endured a turbulent trading session on Monday as investors reacted to growing concerns about a potential US economic downturn. The sell-off was triggered by uncertainty surrounding President Trump’s trade policies and large-scale federal job cuts, which have heightened worries about a looming recession.

The tech-heavy Nasdaq Composite plunged by 4 per cent, reaching its lowest level in six months. Economists have been revising their 2025 forecasts due to concerns that these economic conditions could weaken growth. Tesla shares dropped sharply by 15.4 per cent, erasing the automaker’s gains since Trump’s re-election. The sell-off also extended to major indexes, with the S&P 500 losing 2.7 per cent to close at 5,614.56, and the Dow Jones Industrial Average falling by 2.1 per cent to 41,911.71.

Bitcoin, often seen as a high-risk asset, was not spared from the sell-off. The cryptocurrency tumbled below $80,000 as investors sought the relative safety of other havens such as government bonds. The yield on 10-year US treasury notes fell to 4.226 per cent, signalling a flight to safety amid declining confidence in equity markets.

Shares of tech giants such as Apple, Microsoft, Meta Platforms, and Alphabet were particularly hard hit. Dubbed the “Magnificent Seven”, these companies have seen considerable losses as investors shift focus away from high-growth equities in favour of safer, defensive stocks.

Adding to market volatility, Trump recently imposed fresh 25 per cent tariffs on imports from Canada, Mexico, and China. While some of these duties were later eased, the uncertain approach to policymaking has unsettled both businesses and investors. Although Trump has described this period as an economic “transition”, fears of increased inflation and reduced economic growth persist.

The VIX index, widely regarded as a measure of stock market volatility, surged by 19.5 per cent on Monday to 27.93 – its highest reading since December. Market analysts note the ongoing sell-off comes as investors reconsider initial optimism over deregulation and merger opportunities ushered in during Trump’s second term. The current environment resembles the volatility seen during significant past economic downturns, prompting comparisons to the bursting of the dotcom bubble in March 2000.