The U.S. stock market has lost $5 trillion in value over the past three weeks. The rapid 10% decline from a record high has wiped out trillions of dollars in market value. The S&P 500’s market value was $52.06 trillion at its February 19 peak, according to FactSet.
By Thursday, the index’s market value had dropped to $46.78 trillion. This results in a total loss of about $5.28 trillion in roughly three weeks. The decline has come amid economic tensions with several of the United States’ major trading partners.
Headlines about tariffs have, at times, appeared to drive market moves.
Market’s $5 trillion value loss
There are also signs of slowing economic growth, reflected in weak consumer sentiment surveys and tepid outlooks from various sectors.
Barclays strategist Emmanuel Cau said in a note to clients, “Our interactions with clients indicate that the mood music is changing. While many see recession talk as premature, concerns about erratic policy from the new administration abound, with the ‘uncertainty tax’ hitting growth expectations.”
Another factor contributing to the decline appears to be the unwind of the growth trade related to artificial intelligence. Since February 19, Nvidia is down 17% and the Roundhill Magnificent Seven ETF has fallen 16%.
The run-up in those AI-related stocks before the correction had raised concern that the stock market was too richly valued, with several names at times having their own market caps above $3 trillion. Even now, the S&P 500 is trading at 24.1-times its trailing 12-month earnings, according to FactSet, which is well above its long-term average. The rapid decline in market value underscores the volatility that can characterize markets, especially amid economic and political uncertainties.
As investors navigate these turbulent waters, the focus remains on balancing potential risks with long-term growth opportunities.
