Stocks plunge as recession talk gets louder

Wall Street suffered its steepest decline of the year on Monday, a drop fueled by angst about the economy a day after President Donald Trump refused to rule out the possibility that his policies could trigger a recession.

The S&P 500 slid 2.7%, the worst daily fall in an already three-week-long stretch of selling. The index is now roughly 9% below a record set last month, and approaching a “correction,” a Wall Street term for a decline of 10% or more from a recent high.

Over the past few weeks, Trump has threatened, imposed, suspended and resumed tariffs on America’s largest trade partners: Canada, Mexico and China. The dizzying shifts, including last-minute exemptions for some automakers and energy products, have unnerved investors.

“The market volatility is much less about the bad news of tariffs and much more about the uncertainty of tariffs, especially uncertainty as to what the policy is, where it is headed, how long it will last and what the end result will be,” said David Bahnsen, the chief investment officer at the Bahnsen Group.

In a Fox News interview that aired Sunday, Trump was asked about “rising worries about a slowdown,” by host Maria Bartiromo. He described what might follow as “a period of transition,” and didn’t rule out the possibility that his policies would cause a recession. Asked during the interview when businesses might have clarity on the on-again, off-again tariff policies, Trump responded by suggesting that more tariffs could come.

“We may go up with some tariffs. It depends. We may go up. I don’t think we’ll go down, or we may go up,” he said. “They have plenty of clarity.”

On Monday, retaliatory tariffs by China on U.S. agricultural products came into effect. On Wednesday, the Trump administration is set to put in place a 25% tariff on all U.S. steel and aluminum imports. Trump has also threatened to impose “reciprocal tariffs” on all U.S. imports to match other countries’ tariffs and trading policies next month.

A White House spokesperson, Kush Desai, said in a statement Monday: “Since President Trump was elected, industry leaders have responded to President Trump’s America First economic agenda of tariffs, deregulation and the unleashing of American energy with trillions in investment commitments that will create thousands of new jobs. President Trump delivered historic job, wage and investment growth in his first term, and is set to do so again in his second term.”

The S&P 500 has now erased all the gains it made since Election Day. The Nasdaq has been hit even harder, as a rally in big tech stocks driven by enthusiasm for artificial intelligence reversed course. The index fell into a correction last week, and dropped a further 4% Monday.

“There’s just no support in the tech stocks right now,” said Larry Tentarelli, the chief technical strategist at Blue Chip Daily Trend Report.

Many tech companies have grown so large that movements in their stocks have an outsize influence on the broader market. On Monday, several of the biggest companies were down sharply: Tesla plunged more than 15%, adding to a losing streak that’s come amid falling sales and as investors worry that CEO Elon Musk has been distracted by his role in the Trump administration. Alphabet, Apple and Nvidia each fell more than 4%.

Stocks in Europe and Asia were also under pressure but the declines paled in comparison with losses on Wall Street. An index tracking the eurozone’s largest public companies, which hit a record last week, dropped 1.3%. Hong Kong’s Hang Seng Index fell 1.9%.

Investors seeking havens continued to opt for the relative safety of bonds, pushing down the 10-year U.S. Treasury yield to 4.22%; bond prices move inversely to yields. The combination of falling stocks and declining interest rates is often seen as a sign of economic unease. Oil prices also fell, another signal of concern about the broader economy.

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