US stock market loses $5 trillion in value as Trump ploughs ahead on tariffs

NEW YORK - US President Donald Trump’s tariffs have spooked investors, with fears of an economic downturn driving a stock market sell-off that has wiped out US$4 trillion (S$5.3 trillion) from the S&P 500’s peak in February, when Wall Street was cheering much of Mr Trump’s agenda.

A barrage of new Trump policies has increased uncertainty for businesses, consumers and investors, notably

back-and-forth tariff moves

against major trading partners such as Canada, Mexico and China.

“We’ve seen clearly a big sentiment shift,” said Ms Ayako Yoshioka, senior investment strategist at Wealth Enhancement. “A lot of what has worked is not working now.”

The stock market sell-off deepened on March 10, with the benchmark S&P 500 charting its biggest daily drop – around 2.7 per cent – of the year.

The Nasdaq Composite posted its largest one-day decline since September 2022.

Apple and Nvidia both fell about 5 per cent, and Tesla tumbled 15 per cent.

The S&P 500 on March 10 closed down 8.6 per cent from its Feb 19 record high, nearing a 10 per cent decline that would represent a correction for the index.

The tech-heavy Nasdaq ended March 6 down more than 10 per cent from its December high, weighed down by megacap technology and tech-related stocks that have struggled so far in 2025.

Mr Trump over the weekend declined to predict

whether the US could face a recession

as investors worried about the impact of his trade policy.

Beyond the tariff uncertainty, investors are watching to see if lawmakers can pass a funding Bill to avert a partial federal government shutdown, while a crucial report on inflation looms on March 12.

“The Trump administration seems a little more accepting of the idea that they’re okay with the market falling, and they’re potentially even okay with a recession in order to exact their broader goals,” said Mr Ross Mayfield, investment strategist at Baird. “I think that’s a big wake-up call for Wall Street.”

Other risk assets were also punished, with Bitcoin dropping 5 per cent.

Some defensive areas of the market held up better, with the utilities sector and US government debt seeing more demand.

The S&P 500 has given up all gains recorded since Mr Trump’s Nov 5 election, and it is down nearly 3 per cent in that time.

Hedge funds reduced their exposure to stocks on March 7 at the largest amount in more than two years, according to a Goldman Sachs note released on March 10.

Investors had expressed optimism that Mr Trump’s expected pro-growth agenda including tax cuts and deregulation would benefit stocks, but uncertainty over tariffs and other changes, including federal workforce cuts, has dampened sentiment.

“It was the overwhelming consensus that everything was going to be this great environment once President Trump came into office,” said Mr Michael O’Rourke, chief market strategist at JonesTrading.

“Every time you have structural change you’re going to have uncertainty and you’re going to have friction,” Mr O’Rourke said. “It’s understandable people are starting to be a little concerned and starting to take profits.”

Investors’ equity positioning has fallen in recent weeks, dipping to slightly underweight for the first time since briefly hitting that level in August, Deutsche Bank analysts said in a note on March 7.

A further retreat to the bottom of the historic range for equities weighting, as seen during Mr Trump’s US-China trade war in 2018-2019, could drag the S&P 500 to as low as 5,300, or down another 5.5 per cent from current levels, they added.

In another sign of growing investor unease, the Cboe Volatility index – colloquially known as Wall Street’s “fear gauge” – on March 10 reached its highest closing level since August.

The administration is “still trying to figure out how to define a win politically, economically, and what is the right timeframe”, said Mr Edward Al-Hussainy, senior interest rate and currency analyst at Columbia Threadneedle Investments. “And until they do that, it’s going to be like this every week.” REUTERS