The Market is Shook

The S&P 500 began declining around mid-February 2025 due to economic and policy uncertainty, particularly due to the Trump administration’s tariff plans.

The index hit a record high of 6,144.15 on February 19, after a strong January (up 2.7%). But by the next day, weak economic data brought a wave of bearishness among investors. The U.S. services PMI fell to 49.7 (which is contraction territory), consumer sentiment tanked 10% to 64.7, and home sales slumped to 4.08 million units, all worse than expected. Investors panicked over a potential economic slowdown.

Then came Trump. On February 26, he confirmed 25% tariffs on Canada and Mexico and a 10% bump on China, effective March 4. The S&P 500 dropped 1.59% that day to 5,861.57, as trade war fears flared—Canada and Mexico are huge U.S. trade partners, and investors are worried about retaliation. Nvidia’s earnings that week didn’t help either—revenue beat estimates, but an 8.5% stock slide due to margin misses dragged tech down, pulling the index with it.

By March 10, the S&P 500 was down 8.6% from its peak, losing $4 trillion, and after Trump doubled Canadian steel tariffs to 50%. Consumer staples held up, but tech companies like Tesla (down 15% that day) got crushed. On social media, investors have expressed stagflation worries, as the Fed signaled no quick rate cuts after January’s PCE rose 2.6% annually.

Markets kept sliding into late March as the damage spread. The Dow shed 4.2% for the month, its worst since October 2023, while the Nasdaq took an 8.2% hit—its ugliest stretch since September 2022. Oil prices spiked 5% in February alone. Small businesses are still feeling the pain the most, the Russell 2000 dropped 0.48% yesterday, signaling risk-off sentiment. The Fed’s move on March 18th, a 0.25% rate cut—did little; Powell’s hint at just two more cuts in 2025 fueled fears of a cash-strapped recovery. Yesterday, the S&P 500 experienced a 0.55% uptick, which offers hope, but the scars of a 5.8% monthly loss linger with sentiment as shaky as ever.

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