The U.S. stock market experienced an extremely volatile trading day on Monday, with both the S&P 500 index and the Dow closing sharply lower. Investors are concerned about Trump's insistence on his tariff policy, fearing that this policy could trigger an economic slowdown and rising inflationary pressures.
Since Trump announced tariffs on all imports last week, with higher tariffs on some major trade partners, Wall Street has been severely impacted. Monday's trading volume again broke records, setting a new record for U.S. stock market trading volume for the second consecutive day. In early trading, the three major indices hit their lowest points in over a year. Although a report suggesting Trump might pause tariff implementation sparked a short-lived rebound, the report was quickly denied, leading to another market downturn.
The CBOE Volatility Index (VIX), known as Wall Street's "fear index," briefly soared above 60 during the session, marking its highest level since August 2024. Although it eventually eased, the VIX closed at 46.98 points, the highest closing level in five years.
The fundamental issue in the market is that the government's approach to tackling trade imbalances has exacerbated investors' anxiety. While a portion of Trump's supporters back the government's tariff policy, there are few voices of support in the business and investment community. Following Trump's tariff announcement, the S&P 500 index plummeted 10.5% in two days, wiping out about $5 trillion in market value, the largest two-day drop since March 2020. Last Friday, the Dow confirmed it had entered a technical correction, falling more than 10% from its December all-time high. Meanwhile, the Nasdaq confirmed it had entered a bear market, dropping over 20% from its record closing high.
Earlier on Monday, the S&P 500 index was down 20% from its all-time high. After a report suggested Trump might pause tariffs for 90 days, the index rebounded over 3%. However, the White House quickly denied this news, and the market resumed its downward trend.
This week, several Federal Reserve officials are scheduled to speak, and a range of economic data will be released, including the consumer price index. Investors will be closely monitoring any signals of an economic recession.
