NEW YORK (AP) — On Monday, U.S. stocks witnessed a significant downturn amid growing concerns over President Donald Trump’s trade policies and his recent criticism of the Federal Reserve, prompting investors to move away from the United States market. The S&P 500 saw a 2.1% decline in morning trading, now nearly 16% below its record high set two months ago. Concurrently, the Dow Jones Industrial Average plummeted 726 points, or 1.9%, by 10:30 a.m. Eastern time, with the Nasdaq composite facing the most substantial drop at 2.6%, fueled by losses in Tesla and other prominent tech stocks.
In an unprecedented move, the U.S. dollar also experienced a decline, reflecting the ongoing retreat from U.S. markets. Traditionally, the dollar has strengthened in times of market uncertainty; however, the current situation is different as fears stem directly from Washington’s policies. President Trump’s persistent tough stance on global trade, particularly on imposing tariffs, has raised concerns among economists and investors who warn of a potential recession if these measures are not reversed. Talks between the U.S. and Japan failed to yield an agreement last week, casting doubt on the future prospects of tariff reductions and economic protection.
President Trump has intensified his focus on China, the world’s second-largest economy, leading to escalated tensions between the two economic powerhouses. China issued a warning against other countries engaging in trade deals with the U.S. that could compromise its interests, signaling a willingness to take retaliatory measures if necessary. Furthermore, Trump’s public criticism of Federal Reserve Chair Jerome Powell has added to the market’s unease, with fears of possible repercussions if Powell were to be removed from his position.
Despite the looming uncertainty, Wall Street is bracing for a series of Big Tech companies’ earnings reports due later in the week. Tesla shares saw a significant decline of 6.7%, while other tech giants also contributed to the overall market downturn. On a positive note, Discover Financial Services and Capital One Financial experienced gains following the approval of their proposed merger by the U.S. government. In the bond market, fluctuations in yields indicate investors’ hope for a potential rate cut by the Federal Reserve to bolster the economy.
Global stock markets also reacted to the situation, with Tokyo’s Nikkei 225 falling by 1.3% while indexes in Seoul and Shanghai saw modest gains. The fluctuating bond yields and the decline in the U.S. dollar against other major currencies further highlight the market’s apprehension in the face of ongoing economic challenges. The uncertainty surrounding trade policies, Federal Reserve decisions, and the performance of key companies continues to impact market dynamics, underscoring the need for investors to exercise caution in the current economic climate.