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The US stock market\u2019s downturn deepened on Monday, with buyers reluctant to step in despite speculation of possible trade agreements and signs that Europe may be ready to ease tensions, adopting a less confrontational tone.<\/p>\n
Unconfirmed reports that White House economic adviser Kevin Hassett had floated a possible 90-day pause on new tariffs offered a brief flicker of hope, but that optimism quickly faded.<\/p>\n
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S&P 500 touches 14-month low and enters bear market<\/p>\n
By 16:30 Central European Time, the S&P 500 had fallen 1.3% to 5,010 points, its lowest level since early 2024, extending the index\u2019s cumulative losses to nearly 12% since last week\u2019s tariff announcement \u2013 one of its steepest drops in post-war history, rivalling the sell-offs of October 1987 and the 2008 global financial crisis.<\/p>\n
From its February peak, the benchmark index is now down 20%, marking the onset of a technical bear market.<\/p>\n
Losses continued to be widespread across US indices, with the Dow Jones Industrial Average down 2% and the tech-heavy Nasdaq 100 slipping 1%.<\/p>\n
Mega-cap tech stocks remained under pressure. Tesla dropped 5.5% on the day and has now halved in value since its 2024 highs. Apple lost 3.5%, bringing its total decline to 30% from peak levels.<\/p>\n
In contrast, investors sought refuge in defensive and counter-cyclical names. Dollar Tree gained 7%, while Brown-Forman Corp rose 4.7% and GE Vernova climbed 4.4%, as investors rotated into sectors perceived as more resilient during economic downturns.<\/p>\n
Trump defends tariffs amid backlash<\/p>\n
Last week, Donald Trump announced a new wave of sweeping tariffs targeting a wide range of goods from China, the European Union, and other major trading partners.<\/p>\n
On Monday, Trump posted a message on social media Truth platform, saying: \u201cCountries from all over the World are talking to us. Tough but fair parameters are being set. Spoke to the Japanese Prime Minister this morning\u2026 The only way this problem can be cured is with TARIFFS, which are now bringing Tens of Billions of Dollars into the U.S.A.\u201d<\/p>\n
Trump further defended the tariff strategy. \u201cThe United States has a chance to do something that should have been done DECADES AGO,\u201d he wrote, while criticising trade imbalances with China, the EU and Japan.<\/p>\n
\u201cDon\u2019t be Weak! Don\u2019t be Stupid! Don\u2019t be a PANICAN,\u201d Trump declared, coining a new term for those opposing his trade policies. He claimed the tariffs were already generating \u201cTens of Billions of Dollars\u201d for the U.S. and called them \u201ca beautiful thing to behold.\u201d<\/p>\n
Major global investment banks have swiftly revised their economic forecasts in light of the developments.<\/p>\n
Goldman Sachs lifted its US recession probability to 45%, citing downside risks from trade disruption and weakening corporate confidence. JP Morgan went further, assigning a 60% chance of recession over the next twelve months.<\/p>\n
Europe opens to lower trade barriers<\/p>\n
The market shock follows Trump\u2019s abrupt declaration of wide-ranging tariffs on foreign goods \u2014 a protectionist move that has drawn global scrutiny. While the administration remains steadfast, signs of a more conciliatory tone have emerged from Europe.<\/p>\n
European Commission Vice President and trade chief Maro\u0161 \u0160ef\u010dovi\u010d expressed readiness to negotiate.<\/p>\n
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\u201cWe are ready to discuss zero-for-zero tariffs not only for cars but also for other industrial products,\u201d he said, adding that \u20ac380 billion worth of EU exports to the US, representing about 70% of the bloc\u2019s total exports, are now subject to tariffs.<\/p>\n
Yet, he criticised the lack of progress in talks with Washington, stating: \u201cDespite EU efforts, we have not seen engagement which would lead to a mutually acceptable solution.\u201d He also pushed back against criticism of Europe\u2019s value-added tax (VAT) regime, stressing its fiscal importance to member states. \u201cVAT is an important source of income of EU member states, and we will not change our VAT system.\u201d<\/p>\n
\u201cMarkets are reacting to the most important paradigm shift since World War 2,\u201d \u0160ef\u010dovi\u010d said.<\/p>\n
European equities only slightly rebounded on the news. The Euro STOXX 50 was 3.4% lower, trimming heavier declines during the session.<\/p>\n
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