NEW YORK (Reuters) -Major U.S. stock indexes sank on Monday after U.S. President Donald Trump declined to predict whether his tariff policies could lead to a recession, roiling investor sentiment.
The Nasdaq Composite slumped more than 3% after confirming last week that it’s retreat from December’s record high was a correction. The S&P 500 slid 2%, down about 8% from its all-time high from February 19.
Below are investor and analyst comments about the selloff.
DAN COATSWORTH, INVESTMENT ANALYST, AJ BELL, LONDON
“The U.S. market sell-off is starting to look ugly. Many people have been worried about elevated valuations among U.S. equities for some time and looking for the catalyst for a market correction. A combination of concerns about a trade war, geopolitical tensions and an uncertain economic outlook could be that catalyst.”
“Trump was seen as the market’s savior, promising lower taxes and less stringent regulation. Now his actions represent the harbinger of doom. The R word is back on everyone’s lips as people ponder if trade tariffs will backfire and lead to recession rather than U.S. economic prosperity.”
“During his first term as U.S. president, Donald Trump often cited a rising stock market as being representative of his success. As such, he will not want to see a full-blown market crash months into his second term.”
MICHAEL O’ROURKE, CHIEF MARKET STRATEGIST, JONESTRADING, STAMFORD, CONNECTICUT
“There was so much expectation after the election – a lot of it misguided – but it was the overwhelming consensus that everything was going to be this great environment once President Trump came into office. What he’s trying to enact is structural change… And every time you have structural change you’re going to have uncertainty and you’re going to have friction. It’s understandable people are starting to be a little concerned and starting to take profits.
“Also, we’ve had this age of U.S. exceptionalism where the U.S. has massively outperformed… that’s also part of the backdrop that you could go invest in other places of the world with much lower multiples and maybe at least not be exposed to the expensive valuations of the U.S. while the U.S. pushes its structural shift.”
IDANNA APPIO, PORTFOLIO MANAGER, FIRST EAGLE INVESTMENT MANAGEMENT
“The broader pressure on U.S. assets, I think reflects a lot of increased uncertainty about U.S. policy. That uncertainty, just in general, is quite bad for businesses as they’re not sure how to invest, where to invest, so it becomes harder to make decisions.”
“And we saw that in 2018 and 2019, but this time it’s much more extreme and there are quite a lot of different things happening.”
JAMIE COX, MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND, VA
“Markets are worried really about the debt ceiling, but it’s manifesting itself as a growth scare. The irony is that sentiment is so bad now that markets will likely turn positive at the hint of anything positive, whether it be averting a government shutdown, ending a war (trade or otherwise), etc. — we are at that point in the downdraft.”
ROSS MAYFIELD, INVESTMENT STRATEGIST, BAIRD, LOUISVILLE, KENTUCKY
“The Trump administration seems a little more accepting of the idea that they’re OK with the market falling, and they’re potentially even OK with a recession in order to exact their broader goals. I think that’s a big wake-up call for Wall Street. There had been a sense that President Trump kind of measured his success on stock market performance, there was even somewhat of a ‘Trump put’ so to speak, and I think we’re seeing that’s not the case, so the market is starting to reflect that reality.”
“(Tech stocks have) very extended valuations trading at pretty big premiums to the broader market. So you’re bound to have some air pockets, and technically they don’t look great. There could be more weakness to come over the near term, but I would definitely be buying these high quality growth companies on the dip.”
“One place we’re having to revisit is my preference for US (stocks) over international. The pressure that the Trump administration is putting on foreign governments… has actually, in a lot of cases, resulted in outperformance from those countries (such as) China and Europe. That’s a place we’re revisiting to decide if we think it’s something more structural or just a short term trade.”
AYAKO YOSHIOKA, SENIOR INVESTMENT STRATEGIST, WEALTH ENHANCEMENT, LOS ANGELES
“We’ve seen clearly a big sentiment shift. And part of this is just a result of the momentum that we had seen in many of the growth stocks over the last two years. They’re all sort of falling a lot more so than everything else. And a lot of what has worked is not working now. I think there was just a reason to take some chips off the table. The uncertainty going forward clearly keeps people a little bit more nervous about the trajectory of the market path.”
ART HOGAN, CHIEF MARKET STRATEGIST, B RILEY WEALTH
“The narrative changes on a daily basis around tariffs–that’s what causing all this uncertainty. The damage around markets that has everything to do with sentiment is reflected more in the Nasdaq, because technology stocks are certainly more influenced by risk sentiment. De-risking also tends to take you out of the high beta names which are in the Nasdaq. Today is no different.”
CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER, NORTHLIGHT ASSET MANAGEMENT, CHARLOTTE, NC
“The NASDAQ has been risk-off all year long. Today isn’t anything new from what we’ve seen for the last couple of weeks, but it is a continuation of what we’ve been seeing. And so that’s just the unfortunate combination of very high valuations which is where we started the year and then increased uncertainty.”
THOMAS HAYES, CHAIRMAN AT GREAT HILL CAPITAL LLC
“If you want to know what’s going on with the U.S. market, stop paying attention to tariffs and start paying attention to Japanese government bond yields. The carry trade is unwinding, and all that hot money was in Mag 7. So that’s why tech is down.”
(Reporting by Purvi Agarwal, Lewis Krauskopf, Nikhil Sharma, Sinead Carew, Lisa Pauline Mattackal, Dhara Ranasinghe and Caroline Valetkevitch; Editing by Alden Bentley and Lananh Nguyen)
