The stock market took a tumble on Thursday as investors grew increasingly pessimistic about the Trump administration’s whipsawing policy pronouncements over the past few weeks. The S&P 500 fell 1.4 percent, sliding into a correction and now down 10.1 percent from its peak less than a month ago. Other major indexes, including the Russell 2000 and the tech-heavy Nasdaq Composite, had already fallen into correction territory.
On-again, off-again tariffs and mass layoffs of federal workers have fomented unease on Wall Street. The deeper worry among investors is that uncertainty around the effects of President Trump’s policies is causing consumers to spend less and discouraging businesses from investing. That reticence could, in turn, drive the economy into a downturn, forcing investors to reassess company valuations.
“I think what markets are telling us is that they are very concerned about the potential for a recession,” said Kristina Hooper, chief global market strategist at Invesco. “That is certainly not what markets expected going into 2025.”
Since the 2008-9 financial crisis, there have been nearly a dozen corrections—declines of 10 percent—in the S&P 500. Three of those resulted in bear markets—declines of 20 percent.
At a White House event yesterday, President Donald Trump dealt an unexpected blow to Wall Street. His handwritten notes, which were caught on camera, have sparked significant market reactions. Wall Street assumed the stock market would act as a check on Trump’s new administration, but that isn’t panning out.
February was a bad month for big-name hedge funds, and March is looking worse.
Tariffs disrupt markets, raise concerns
The stock market’s volatility has been dizzying, with the Nasdaq experiencing its worst session since 2022.
The markets have been responding to Trump’s tariff policy and his commitment to pushing forward with a trade war against some of America’s biggest partners, including Canada and Mexico. The president announced a plan to double US tariffs on Canadian steel and metal imports to 50%, in retaliation to Ontario imposing a 25% tariff on electricity it exports to the US. However, Trump reversed course after Canada suspended the new electricity charges.
US tariffs of 25% on metal imports, including from Canada, still took effect today. Europe, which is also impacted by the latest tariffs, announced retaliatory measures, imposing tariffs on $28.4 billion worth of US goods, including boats, bourbon, and motorbikes. As markets have started to flash warning signs about the tariff whiplash, the Trump administration’s response has been largely indifferent.
Unlike his first term, where market performance was a key indicator of success, Trump’s current administration appears less concerned about investors’ feelings or holdings. Consumer strength has been a pillar of the post-pandemic economy, but a weaker outlook for consumer demand has slashed first-quarter expectations for airlines and retailers. Inflation, high interest rates, and tariff uncertainty are pushing shoppers into a save-not-spend mindset.
March isn’t looking any better for large multistrategy hedge funds. Millennium, Point72, and Schonfeld have all reported losses this month, struggling to cope with the volatility caused by Trump’s trade policy. The stock market’s turbulent response to Trump’s tariff policies highlights the ongoing challenges faced by the current administration.
With Wall Street increasingly on edge, the implications for investors and businesses are profound.
