Dow Jones tumbled on Monday as selling pressures that dragged Wall Street last week continued, as investors reacted to President Donald Trump’s comments on a recession due to US tariffs being implemented.
According to Investors Business Daily, the Dow Jones Industrial Average tanked as much as 500 points. The loss amounted to 1.2% before moderating to 0.8% in the late morning.
Major indexes including Dow Jones fell on negative investor sentiment
During Monday trading hours, major stock indexes went down after President Trump declined to predict if his tariff policies would lead to a recession. This resulted in negative investor sentiment.
The S&P 500 shed 1.6% as the tech-heavy Nasdaq composite was down 2.4% in the morning session, to their lowest levels since September 2024.
The ‘Magnificent Seven’ weighed down heavily on the Nasdaq as Google parent company Alphabet was down 4%, Tesla continued its losing streak as it lost a further 8%, whilst Meta and Nvidia lost 5% each on Monday morning.
In an interview that was aired Sunday on Fox News, President Trump declined to rule out a recession this year saying, “There is a period of transition” that will eventually pay off for the economy.
Stocks across major indices have been under pressure as investors fret over a possible recession due to tariffs implemented by the Trump administration. Analysts fear that these levies could drive prices higher, making it harder for the Federal Reserve to lower rates.
CFRA Research chief investment strategist Sam Stovall told CNBC that the markets were experiencing “manufactured correction.”
“I say manufactured because its really based on response to the new administration’s tariff programs, or at least threats of tariffs, and what kind of an impact that will have on the economy. Now, with people talking about potential recession, I think its just adding to investor concern.”
Stovall.
“Right now we are going through a typical pullback and probably will experience a mild correction before all is completed, which actually would be good for the resetting of the dials of this ongoing bull market,” he added.
Consumer price index to impact stocks
The February consumer price index on Wednesday will headline the coming week’s economic data, with Wall Street expecting further disinfection as concerns shift from higher prices to lower growth.
However, markets are more concerned about the Federal Reserve’s primary inflation rate, the core PCE price index due on Thursday. It combines inputs from the CPI and the producer price index. In January a hot core CPI reading was offset by some tame PPI data, especially cooling health care services inflation.
Stovall said Wall Street and its economists are forecasting more favorable readings which might be encouraging. They forecast the headline and core CPI to be lower and “looked as if ditto for PPI.” With the inflation situation cooling off, he said that would go a long way in helping to calm investors’ nerves.
According to economists, the market is approaching an oversold level currently, so any kind of good news could trigger at least a counter-trend rally.
In US manufacturing, overall activity is still in the positive, but not as much as Wall Street predictions. New orders have been shrinking while prices rose amid discussions about who will pay for Trump’s tariff.
“Demand eased, production stabilized, and de-staffing continued as panelists’ companies experience the first operational shock of the new administration tariff policy,” said Timothy Fiore, chair of the Institute for Supply Management’s manufacturing business survey committee.
However, across the Pacific, manufacturers reported an uptick in orders in February as importers rushed to beat higher US tariffs and a Chinese state media reportedly said Beijing is exploring ways to retaliate.
In the bond market, the yield on the 10-year Treasury fell 4.16% just before the manufacturing report’s release. It’s come down sharply since January when it was approaching 4.80%, as worries have built about the possibility of a slowing US economy.
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