President Trump's tariff policy triggered a panic selling in the market, resulting in a $4 trillion evaporation of the US stock market value. The S&P 500 index has fallen sharply from its peak last month, and the Nasdaq index has also recorded its largest daily decline since September 2022. Investors' concerns about an economic recession have intensified, and the Trump administration seems to be open to the possibility of a market downturn and economic recession in order to achieve its broader policy goals. This series of events highlights the profound impact of tariff policies on the market and economic prospects.

Tariff policy triggers market panic

The Trump administration's tariff measures targeting major trading partners such as Canada, Mexico, and China have increased uncertainty for businesses, consumers, and investors. Ayako Yoshioka, Senior Investment Strategist at Wealth Enhancement, pointed out that there has been a significant shift in market sentiment, and many once effective strategies are no longer applicable. On Monday (March 10th), the decline in the US stock market deepened, with the S&P 500 index falling 2.7%, the largest single day decline of the year, and the Nasdaq index falling 4%, the largest single day decline since September 2022.

Technology stocks and large cap stocks suffer heavy losses

The technology and large cap stocks that have driven the market higher in the past two years were hit hard on Monday. The technology sector of the S&P 500 index fell by 4.3%, with Apple and Nvidia both falling by about 5%, and Tesla plummeting by 15%. Other risky assets were not spared, and Bitcoin fell by 5%. Some defensive sectors in the market performed well, with the utility sector rising by 1% daily, while demand for safe haven US Treasury bonds increased, and the 10-year Treasury yield fell to about 4.22%.

Investors' anxiety intensifies

The S&P 500 index has given up all its gains since Trump's election on November 5th. Goldman Sachs' report shows that hedge funds reduced their holdings of stocks last Friday, with the largest reduction in over two years. Although stock valuations have eased with the recent sharp decline, the overall market valuation is still significantly higher than the historical average. AJ Bell investment analyst Dan Coatsworth pointed out that the combination of concerns about trade wars, geopolitical tensions, and uncertain economic prospects could serve as a catalyst for market correction. The Cboe volatility index reached its highest closing level since August on Monday, further indicating investors' unease.

summarize

Trump's tariff policy not only triggered panic selling in the market, but also intensified investors' concerns about an economic recession. The significant declines in the S&P 500 index and Nasdaq index, as well as the heavy losses in technology and large cap stocks, highlight the market's pessimistic expectations for tariff policies and economic prospects. Despite the good performance of defensive sectors and safe haven assets, investors' anxiety is still intensifying. In the future, the direction of tariff policies and their impact on the economy and market will continue to be the focus of market attention. If the Trump administration fails to effectively alleviate market concerns, the risk of economic recession may further intensify.