ADVERTISEMENTThe US stock market’s downturn deepened on Monday, with buyers reluctant to step in despite speculation of possible trade agreements and signs that Europe may be ready to ease tensions, adopting a less confrontational tone.
Unconfirmed reports that White House economic adviser Kevin Hassett had floated a possible 90-day pause on new tariffs offered a brief flicker of hope, but that optimism quickly faded.
S&P 500 touches 14-month low and enters bear market
By 16:30 Central European Time, the S&P 500 had fallen 1.3% to 5,010 points, its lowest level since early 2024, extending the index’s cumulative losses to nearly 12% since last week’s tariff announcement – one of its steepest drops in post-war history, rivalling the sell-offs of October 1987 and the 2008 global financial crisis.
From its February peak, the benchmark index is now down 20%, marking the onset of a technical bear market.
Losses continued to be widespread across US indices, with the Dow Jones Industrial Average down 2% and the tech-heavy Nasdaq 100 slipping 1%.
Mega-cap tech stocks remained under pressure. Tesla dropped 5.5% on the day and has now halved in value since its 2024 highs. Apple lost 3.5%, bringing its total decline to 30% from peak levels.
In contrast, investors sought refuge in defensive and counter-cyclical names. Dollar Tree gained 7%, while Brown-Forman Corp rose 4.7% and GE Vernova climbed 4.4%, as investors rotated into sectors perceived as more resilient during economic downturns.
Trump defends tariffs amid backlash
Last week, Donald Trump announced a new wave of sweeping tariffs targeting a wide range of goods from China, the European Union, and other major trading partners.
On Monday, Trump posted a message on social media Truth platform, saying: “Countries from all over the World are talking to us. Tough but fair parameters are being set. Spoke to the Japanese Prime Minister this morning… The only way this problem can be cured is with TARIFFS, which are now bringing Tens of Billions of Dollars into the U.S.A.”
Trump further defended the tariff strategy. “The United States has a chance to do something that should have been done DECADES AGO,” he wrote, while criticising trade imbalances with China, the EU and Japan.
“Don’t be Weak! Don’t be Stupid! Don’t be a PANICAN,” Trump declared, coining a new term for those opposing his trade policies. He claimed the tariffs were already generating “Tens of Billions of Dollars” for the U.S. and called them “a beautiful thing to behold.”
Major global investment banks have swiftly revised their economic forecasts in light of the developments.
Goldman Sachs lifted its US recession probability to 45%, citing downside risks from trade disruption and weakening corporate confidence. JP Morgan went further, assigning a 60% chance of recession over the next twelve months.
Europe opens to lower trade barriers
The market shock follows Trump’s abrupt declaration of wide-ranging tariffs on foreign goods — a protectionist move that has drawn global scrutiny. While the administration remains steadfast, signs of a more conciliatory tone have emerged from Europe.
European Commission Vice President and trade chief Maroš Šefčovič expressed readiness to negotiate.
ADVERTISEMENT“We are ready to discuss zero-for-zero tariffs not only for cars but also for other industrial products,” he said, adding that €380 billion worth of EU exports to the US, representing about 70% of the bloc’s total exports, are now subject to tariffs.
Yet, he criticised the lack of progress in talks with Washington, stating: “Despite EU efforts, we have not seen engagement which would lead to a mutually acceptable solution.” He also pushed back against criticism of Europe’s value-added tax (VAT) regime, stressing its fiscal importance to member states. “VAT is an important source of income of EU member states, and we will not change our VAT system.”
“Markets are reacting to the most important paradigm shift since World War 2,” Šefčovič said.
European equities only slightly rebounded on the news. The Euro STOXX 50 was 3.4% lower, trimming heavier declines during the session.
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