The latest market downturn has wiped out $4 trillion from the S&P 500’s value, marking a dramatic reversal from Wall Street’s previous confidence in Trump’s economic agenda.
Major indices have tumbled 8%, reflecting mounting uncertainty among investors.
Rising concerns over tariffs on Canada, Mexico, and China have intensified fears of an economic slowdown.
Some believe the administration’s trade policies could destabilize growth, while others view the market slide as part of a broader strategic shift.
A key factor in the sell-off appears to be the withdrawal of foreign investors, particularly from the U.S. Treasury bonds.
As China’s trade surpluses shrink, its reduced reinvestment in American financial markets is tightening liquidity, amplifying volatility. Additionally, investors have offloaded shares in major tech giants, including Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia, and Tesla.
Another theory suggests that the administration is aiming to transition the economy away from consumer-driven expansion toward corporate-led growth.
Policy measures such as tariff hikes and spending cuts are seen as attempts to control inflation and address the $34 trillion national debt.
While this has led to a drop in Treasury yields from 4.8% to 4.25%, financial leaders caution that such moves could tip the economy into recession.
The unpredictability surrounding economic policies has left businesses hesitant, slowing investment and hiring decisions.
Global markets are already feeling the ripple effects. European stocks have taken a hit, and Asian markets—including India’s Dalal Street—are bracing for potential fallout.
Continued foreign investor withdrawals could increase volatility, particularly in sectors like IT. The next few weeks will be pivotal in determining whether this is a temporary setback or the beginning of a more severe financial crisis.
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