President Donald Trump warned there would be a "period of transition" amid his trade war with Mexico, Canada and China.
The market responded by dropping over 2.5% on Monday, below 42,000.
"The S&P 500 fell more than 3% and the Nasdaq Composite tumbled nearly 5% as shares of big tech companies extended their selloff," the Wall Street Journal reported. "Tesla's stock lost 15%. Shares of the other Magnificent Seven stocks—Apple, Microsoft, Alphabet, Amazon.com, Nvidia and Meta Platforms—fell more than 3%.
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There was a big rally after the 2024 election, when investors thought Trump would benefit corporations. Those gains have since disappeared.
A little over half of Americans participate in the stock market, according to research director Jack Caporal. Most Americans face expensive grocery prices and high costs in fuel, Axios reported Monday, citing the commodities market.
The province of Ontario has also announced plans to issue a 25% surcharge on energy sent to the United States in response to Trump's tariffs. CBS News reported that this move pushed natural gas futures to their highest point since December 2022.
"The risks of higher inflation as a result of a broader tariff war have taken a back seat in the overall market view recently, as the risks of slower economic growth have shifted to the forefront," John Canavan, lead U.S. analyst at Oxford Economics told CBS News on Monday.
After the market closed down last week, Yahoo Finance executive editor Brian Sozzi wrote, "recession calls or predictions for a sharp economic slowdown are coming into the light."
"Conventional estimates understate the likely impact on economic activity from the trade war and DOGE cuts. This implies that growth will slow more than expected," said BCA Research's veteran strategist Peter Berezinm, who predicted a 75% chance a recession will happen in the next three months.
Last week, the February jobs report revealed a significant slowdown as well, with just 77,000 net jobs gained. The numbers also showed that the federal job cuts weren't being reflected in the numbers. Only about 10,000 of those job losses came from government workers. It prompted analysts and commentators to predict the March report would be a "bloodbath."
Still, over the weekend, Commerce Secretary Howard Lutnick promised NBC News, "There's going to be no recession in America."
