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US Stock Market Decline Amid Trade Policy Uncertainty
The US stock market experienced notable declines on Monday, amid assertions from the White House aiming to distance the current economic turmoil from President Trump’s trade strategies.
The S&P 500 index saw a decrease of 2.7%, while the Dow Jones Industrial Average dipped by 2%. The technology-centric Nasdaq composite experienced a sharper fall of 4%, primarily driven by significant sell-offs in major tech stocks known as the “magnificent seven,” including Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia, and Tesla. Notably, Tesla’s shares plummeted 15%, marking its most substantial one-day drop since September 2020.
This downturn followed President Trump’s evasive responses concerning potential recession indicators during an interview on Sunday. When asked about his recession expectations, Trump stated, “There is a period of transition, because what we’re doing is very big … It takes a little time, but I think it should be great for us.”
Kevin Hassett, head of the National Economic Council, expressed optimism in a CNBC interview, asserting that uncertainties surrounding Trump’s trade policies would be clarified by early April and emphasizing that these policies were successfully generating jobs in the United States.
“It’s starting to have the intended effect of onshoring in the US,” Hassett remarked, highlighting a recent employment report that indicated an addition of 10,000 manufacturing jobs in February. This increase translates to a minor 0.08% rise in a sector that encompasses approximately 12.7 million jobs nationwide.
Hassett emphasized, “There’s a lot of reasons to be extremely bullish going forward,” reiterating the administration’s goals of historic tax reductions, extensive deregulation, and a productivity surge driven by advancements in artificial intelligence.
Despite the market’s recent fluctuations, Trump and his aides have been actively engaging in media interactions to alleviate concerns regarding a recession while promoting their trade policies.
Since President Trump’s inauguration, his administration has engaged in a trade confrontation with the nation’s three largest trading partners. Notably, tariffs on China have escalated from an initial 10% to 20%, and although tariffs on goods from Mexico and Canada were reduced by 25%, threats to reintroduce these tariffs loom in the coming month.
The Atlanta Federal Reserve’s GDP Now tracker, a respected tool for predicting economic growth, indicates a potential contraction in the US economy during the first quarter, which is largely attributed to significant negative impacts from net trade.
Despite these indicators, Trump has frequently rejected the notion that his trade measures have induced market unpredictability.
Howard Lutnick, Trump’s Secretary of Commerce, echoed a confident forecast during an appearance on NBC’s Meet the Press, declaring, “There’s going to be no recession in America,” and likened skepticism surrounding Trump’s trade policies to the doubts that surfaced during his initial election campaign.
“You are going to see over the next two years the greatest set of growth coming from America,” Lutnick insisted, projecting an optimistic outlook amid ongoing economic challenges.
Source
www.theguardian.com