The US stock market has experienced a significant shift in sentiment in the past 50 days, with the recent decline in stock prices prompting concerns about the economic outlook. The S&P 500 index fell by nearly 3% on Monday, while the tech-heavy Nasdaq dropped by 4%. Major tech stocks such as Nvidia and Apple lost around 5% of their value and Tesla’s stock plummeted by 15%, now trading below $700 billion.
The technology sector, which had been a key driver of growth in the market, is particularly hard hit. Tesla, once a favorite among investors, is struggling with declining sales in Europe and California, as well as a stagnant product lineup. The close ties between Tesla CEO Elon Musk and US President Donald Trump could also pose a challenge.
The cryptocurrency market is also under pressure, with Bitcoin falling below $77,000 and companies with ties to the digital currency, such as MicroStrategy, suffering significant losses.
Government bond yields, on the other hand, are rising, with the 10-year US Treasury yield falling to 4.22%, a sign of growing economic concerns.
Economic data is mixed, with the labor market still showing stability, but with a notable slowdown. The Atlanta Fed’s GDP tracker is predicting a contraction in the first quarter of 2025, although some analysts attribute this to one-off effects such as the impact of new tariffs on imports.
Delta Air Lines has reported a decline in bookings and consumer spending is also showing signs of weakness. The Trump administration’s protectionist trade policies, marked by a patchwork of tariffs on friendly and competing nations, are adding to the uncertainty.
In an interview with Fox News, Trump expressed confidence in the economy, describing the current situation as a “transitional phase” in which economic adjustments are inevitable. Treasury Secretary Scott Bessent has also referred to the current market conditions as a “detox phase.” However, these statements are being viewed as a lack of interest in the stock market, a marked contrast to Trump’s earlier enthusiasm for the market as a personal performance metric.
If the concerns about the economy continue to manifest, the “felt recession” could become a real threat. The global implications of the US market’s weakness are already being felt, with the Nikkei and KOSPI in Asia and the SMI in Switzerland also experiencing losses. Gold, a traditional safe-haven asset, is holding its value, with a recent price of $2,900 per ounce, a 10% increase since the start of the year, driven by central bank purchases and concerns about further trade conflicts.
Bitcoin, on the other hand, has failed to establish itself as a crisis currency and is struggling to find a new impetus. The “Trumpcession” presents investors with difficult decisions, with stocks and cryptocurrencies under pressure, while bonds and gold are gaining in attractiveness. The outcome will depend on the Trump administration’s future economic policies and the markets must prepare for a period of uncertainty.