US stock markets experienced a severe plunge on Monday, marking the darkest day in years for investors. The S&P 500 fell approximately 2.7%, while the technology-focused Nasdaq dropped by as much as 4.2%, erasing hundreds of billions of dollars in market value within a single day. Notably, Tesla shares fell by almost 14%, resulting in a nearly $120bn loss in market capitalization, and the stock is now more than 9% lower than on election day.
Analysts attribute the drastic market downturn to mounting concerns over President Donald Trump’s economic policies. Trump's recent threats of escalating tariffs and initiating trade wars with major partners including Mexico, Canada, China, and Europe have heightened fears of an impending recession. These policies have raised doubts about the stability of the US economy, particularly as recent data showed a cooling labor market and slower job growth in February.
Market strategists are warning of the potential for a significant collapse in the indices if economic growth slows further. Morgan Stanley strategist Michael Wilson, for example, has cautioned that the S&P 500 could drop by as much as 20% from its current value if recession risks materialise. JPMorgan and Citi have also forecast substantial declines, with potential targets around 5,200 and 5,500 points respectively.
The downturn in the US has also spilled over to European markets, with indices like the Stoxx Europe 600, the Frankfurt DAX, and the Copenhagen stock exchange, which saw an 8% drop in pharmaceutical giant Novo Nordisk’s shares, all recording losses.
As investors brace for further uncertainty, the market remains highly sensitive to any developments in US fiscal policy and global trade tensions, with the potential for the economic fallout to extend well beyond Monday’s record losses.
