Stocks fell sharply on Monday as Wall Street’s fears tied to President Donald Trump’s tariffs continue to pressure the market and investors wait for new economic data, especially inflation on Wednesday.
The Dow Jones Industrial Average plunged 906 points, or 2.1%, in afternoon trading. But the other major market indexes saw even steeper losses. The S&P 500 fell 2.9%, and the Nasdaq Composite plummeted 4.2%. Last week was the stock market’s worst in two years.
“Uncertainty about U.S. trade policy and weaker economic data are leading to investor caution,” Angeles Investments CIO Michael Rosen told Quartz. Investors, he said, “are rotating from previous market leaders to companies and markets that have lagged. Investors should diversify portfolios out of the U.S. as a weaker dollar favors non-U.S. assets.”
The so-called Magnificent Seven tech stocks also lost ground. Tesla (TSLA) stock dropped 13%, erasing its post-election rally. Nvidia (NVDA) stock was off about 5%, bringing its slide so far this year to about 22% amid tariff and recession fears.
The president’s sweeping tariffs on Canada, Mexico, and China last week — with the promise of additional duties in the near future — rattled stock markets and drove pushback from business groups. Although some exemptions and delays were announced later in the week, Wall Street’s worries weren’t assuaged.
Goldman Sachs (GS) said Friday that the likelihood of a recession within the next 12 months has increased from 15% to 20%. If the White House continues with additional tariffs, the bank said the risk of a recession would increase.
On Sunday, Trump was asked by Fox News (FOXA) host Maria Bartiromo if he was expecting a recession this year. The president didn’t rule it out as a potential outcome.
“I hate to predict things like that,” Trump said. “There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing, and there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us.”
Cabinet officials have largely brushed off the market’s decline, even as they acknowledge some signs of weakness in the economy.
Treasury Secretary Scott Bessent told CNBC that the market has “just become hooked” on government spending and that “there’s going to be a detox period.” Commerce Secretary Howard Lutnick said the U.S. would stick to its future tariff plans, said he wouldn’t bet on a recession, and said the stock market doesn’t affect federal policy.
—Josh Fellman contributed to this article.