An IMGW News Report
Wall Street’s uneasy start to the year took a sharp turn for the worse on Monday as investors rushed for the safety of bonds and other defensive assets. The S&P 500 plunged 2.7%, marking its steepest one-day drop since December and deepening what has already been a punishing stretch for equities. The decline places the index in its worst six-day slump since September 2022, with losses totalling 5.7% over the past week.
The trigger for the latest sell-off came from comments made by President Trump during a Fox News interview on Sunday. Pressed on whether he expected the U.S. economy to enter a recession, Trump sidestepped the question, instead referring to a “period of transition” as his tariffs take hold. It was a remark that echoed his recent address to Congress, where he admitted there would be “a little disturbance” but insisted the economy would adjust. Markets, however, were less reassured.
The S&P 500 had already been under pressure since last Monday, when Trump confirmed a 25% tariff on Canadian and Mexican imports. Stocks dropped 1.8% that day, and although the administration later partially delayed the tariffs, equities continued to tumble. Monday’s drop leaves the index down 8.6% from its all-time high three weeks ago, eclipsing the 8.4% drawdown seen during August’s market turmoil.
“Historically, the S&P 500 sees a correction every 173 trading days on average, yet it has now gone 340 days without one”
The speed of the decline has raised concerns among analysts. While the last correction—a 10.3% drop between July and October 2023—played out over three months, this downturn has been far more abrupt. Historically, the S&P 500 sees a correction every 173 trading days on average, yet it has now gone 340 days without one, an unusually long stretch.
With investor sentiment rattled and uncertainty over the economic outlook mounting, the question is whether this sell-off will stabilise or develop into something more severe. Past corrections have often proved short-lived, but with monetary policy, trade disruptions, and geopolitical risks clouding the picture, markets may struggle to regain their footing in the weeks ahead.
