NEW YORK (AP) — The U.S. stock market’s sell-off cut deeper on Monday as Wall Street questioned how much pain President Donald Trump will let the economy endure through tariffs and other policies in order to get what he wants.
The S&P 500 dropped 2.7% to drag it close to 9% below its all-time high, which was set just last month. At one point, the S&P 500 was down 3.6% and on track for its worst day since 2022. That’s when the highest inflation in generations was shredding budgets and raising worries about a possible recession that ultimately never came.
The Dow Jones Industrial Average dropped 890 points, or 2.1%, after paring an earlier loss of more than 1,100, while the Nasdaq composite skidded by 4%.
It was the worst day yet in a scary stretch where the S&P 500 has swung more than 1%, up or down, seven times in eight days because of Trump’s on -and- off -again tariffs. The worry is that the whipsaw moves will either hurt the economy directly or create enough uncertainty to drive U.S. companies and consumers into an economy-freezing paralysis.
The economy has already given some signals of weakening, mostly through surveys showing increased pessimism. And a widely followed collection of real-time indicators compiled by the Federal Reserve Bank of Atlanta suggests the U.S. economy may already be shrinking.
Asked over the weekend whether he was expecting a recession in 2025, Trump told Fox News Channel: “I hate to predict things like that. 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.” He then added, “It takes a little time. It takes a little time.”
Trump says he wants to bring manufacturing jobs back to the United States, among other reasons he’s given for tariffs. His Treasury secretary, Scott Bessent, has also said the economy may go through a “detox” period as it weans off an addiction to spending by the government. The White House is trying to limit federal spending, while also cutting the federal workforce and increasing deportations, which could hinder the job market.
The U.S. job market is still showing stable hiring at the moment, to be sure, and the economy ended last year running at a solid rate. But economists are marking down their forecasts for how the economy will perform this year.
At Goldman Sachs, for example, David Mericle cut his estimate for U.S. economic growth to 1.7% from 2.2% for the end of 2025 over the year before, largely because tariffs look like they’ll be bigger than he was previously forecasting.
