NEW YORK, New York - U.S. stocks plunged on Monday, joining a global rout which followed U.S. President Donald Trump not ruling out a recession as a result of widespread, controversial trade tariffs. The Dow Jones shed nearly 900 points, while the tech-laden Nasdaq Composite tumbled four percent.
"We are in the throes of a manufactured correction. I say manufactured because it's really based in 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 it's just adding to investor concern," Sam Stovall, chief investment strategist at CFRA Research told CNBC Monday.
"Right now we're 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," Stovall added.
On Sunday, President Trump was asked by Fox News's Maria Bartiromo if he thought a recession was on the cards. "I hate to predict things like that," the president replied. "There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing… it takes a little time, but I think it should be great for us," he said.
Following are Monday's closing quotes for the key U.S,. stock indices:
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S&P 500 (^GSPC): The benchmark index fell 155.62 points, or 2.70 percent, closing at 5,614.58.
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Dow Jones Industrial Average (^DJI): The Dow dropped 890.01 points, or 2.08 percent, ending at 41,911.71.
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NASDAQ Composite (^IXIC): The tech-heavy index suffered the most significant loss, plunging 727.90 points, or 4.00 percent, to close at 17,468.32.
Market Drivers:
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Trade Tensions: Ongoing global trade disputes, particularly involving the United States, have heightened market uncertainty. The recent imposition of tariffs has led to concerns about a potential slowdown in global economic growth.
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Recession Fears: Investors are increasingly wary of a possible U.S. recession, influenced by volatile tariff policies and economic indicators suggesting a slowdown. This sentiment has driven a shift towards safer assets, impacting equity valuations.
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Tech Sector Sell-Off: The technology sector faced substantial losses, with major companies like Tesla experiencing significant declines. Tesla's shares have fallen more than 50 percent from their peak in December, reflecting investor concerns over the company's prospects amid broader market volatility.
Outlook:
As trade negotiations continue and economic data releases loom, global stock markets are expected to remain volatile. Investors are advised to monitor developments closely, as equity values may fluctuate in response to geopolitical events and economic indicators.
Global Forex Market Update: Dollar Weakens Amid Trade Tensions and Recession Fears
The U.S. dollar fell further Monday, pressured by escalating trade tensions and growing concerns over a potential U.S. recession. The U.S. dollar weakened against major currencies, reflecting investors' apprehensions about the economic outlook.
Key Currency Movements:
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EUR/USD (Euro/US Dollar): The euro edged higher against the dollar, trading at 1.0824, marking a modest increase of 0.03 percent.
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USD/JPY (US Dollar/Japanese Yen): The dollar declined by 0.76 percent against the yen, settling at 147.34.
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USD/CAD (US Dollar/Canadian Dollar): The greenback strengthened against the Canadian dollar, with the pair trading at 1.4445, an increase of 0.59 percent.
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GBP/USD (British Pound/US Dollar): The British pound weakened by 0.30 percent against the dollar, trading at 1.2871.
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USD/CHF (US Dollar/Swiss Franc): The dollar saw a slight uptick against the Swiss franc, trading at 0.8813, up 0.21 percent.
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AUD/USD (Australian Dollar/US Dollar): The Australian dollar decreased by 0.40 percent against the U.S. dollar, trading at 0.6279.
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NZD/USD (New Zealand Dollar/US Dollar): The New Zealand dollar edged down by 0.13 percent against the U.S. dollar, trading at 0.5697.
Market Influences:
The currency market's movements were largely attributed to:
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Trade Tensions: Ongoing global trade disputes, particularly involving the United States, have heightened market uncertainty. The recent imposition of tariffs has led to concerns about a potential slowdown in global economic growth.
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Recession Fears: Investors are increasingly wary of a possible U.S. recession, influenced by volatile tariff policies and economic indicators suggesting a slowdown. This sentiment has driven a shift towards safer assets, benefiting currencies like the Japanese yen and Swiss franc.
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Equity Market Declines: Significant sell-offs in global equity markets, including a sharp drop in U.S. stock indices, have further fueled risk aversion, impacting currency valuations.
World stock markets in turmoil, UK, European and Canada shares dive, Asian markets mixed, but mostly lower
On Monday, global stock markets experienced a downturn, influenced by escalating concerns over potential economic slowdowns and ongoing trade tensions. Major indices across Europe and Asia recorded notable declines.
Canadian Market:
- S&P/TSX Composite Index (^GSPTSE): Canada's primary stock index declined 378.05 points, or 1.53 percent, finishing at 24,380.71.
UK and European Markets:
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FTSE 100 (United Kingdom): Fell 79.66 points, or 0.92 percent, closing at 8,600.22.
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DAX Performance Index (Germany): Decreased by 387.99 points, or 1.69 percent, ending at 22,620.95.
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CAC 40 (France): Declined 73.20 points, or 0.90 percent, to close at 8,047.60.
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EURO STOXX 50 Index: Dropped 81.43 points, or 1.49 percent, finishing at 5,386.98.
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Euronext 100 Index: Lost 18.97 points, or 1.19 percent, closing at 1,571.11.
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BEL 20 (Belgium): Experienced a significant decline of 108.38 points, or 2.42 percent, ending at 4,360.96.
Asian Markets:
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Hang Seng Index (Hong Kong): Fell 447.81 points, or 1.85 percent, to 23,783.49.
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SSE Composite Index (China): Fell 6.38 points, or 0.19 percent, to close at 3,366.16.
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Nikkei 225 (Japan): Contrarily, it rose by 141.10 points, or 0.38 percent, finishing at 37,028.27.
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STI Index (Singapore): Decreased by 15.41 points, or 0.39 percent, closing at 3,899.07.
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S&P BSE SENSEX (India): Declined 217.41 points, or 0.29 percent, finishing at 74,115.17.
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IDX Composite (Indonesia): Dropped 37.79 points, or 0.57 percent, closing at 6,598.21.
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FTSE Bursa Malaysia KLCI: Fell 10.81 points, or 0.70 percent, ending at 1,536.46.
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KOSPI Composite Index (South Korea): Increased by 6.91 points, or 0.27 percent, ending at 2,570.39.
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TWSE Capitalization Weighted Stock Index (Taiwan): Declined 116.92 points, or 0.52 percent, to 22,459.15.
Oceania:
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S&P/ASX 200 (Australia): Contrary to the broader trend, it rose by 14.10 points, or 0.18 percent, ending at 7,962.30.
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ALL ORDINARIES (Australia): Increased by 13.20 points, or 0.16 percent, to close at 8,191.70.
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S&P/NZX 50 Index Gross (New Zealand): Gained 116.19 points, or 0.94 percent, to close at 12,515.97.
Middle Eastern Markets:
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TA-125 (Israel): Decreased by 22.05 points, or 0.86 percent, closing at 2,527.23.
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EGX 30 Price Return Index (Egypt): Edged up slightly by 6.30 points, or 0.02 percent, ending at 31,137.00.
Africa:
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