U.S. stocks fell sharply on Monday, continuing the prior week’s losses after President Trump said the economy faces a “period of transition” and would not rule out a recession.
The Dow Jones Industrial Average was down 445 points, or 1%, at 42,356. The S&P 500 dropped 120 points, or 2.1%, to 5,649, and the tech-have Nasdaq shed 632 points, or 3.5%, to 17,565.
Wall Street’s losses come a day after Mr. Trump declined to state whether he expects a recession this year, with the president telling Fox News on Sunday that “I hate to predict things like that. There is a period of transition, because what we’re doing is very big.”
The White House is sticking with its stance that tax cuts and tariff revenue ahead will bolster the economy is hitting investor sentiment, with last week marking the largest market rout since Mr. Trump was reelected four months ago.
The S&P 500 continued its fall from a record high in February, with strategists cautioning of ongoing stock volatility amid uncertainty about U.S. trade policy, tariffs and inflation. Some economists believe inflation is likely to rise this year, with economists at Morgan Stanley Research and Goldman Sachs recently hiking forecasts.
“The risks of higher inflation as a result of a broader tariff war have taken a back seat in the overall market view recently, as the risks of slower economic growth have shifted to the forefront,” stated John Canavan, lead U.S. analyst at Oxford Economics.
The White House agency of cutting taxes and regulation is geared toward bringing manufacturing and jobs back to the U.S., but the ultimate outcome of Mr. Trump’s policies is far from clear.
“Many investors support the president’s pro-growth business agenda, but the administration’s frenetic approach to policymaking is unsettling,” according to Michael Arone, chief investment strategist at State Street Global Advisors.