Wall Street plunged on Black Monday as panic sentiment increased.

On Monday, the U.S. stock market experienced a severe sell-off as investors fled from risk assets, driven by a sudden surge in market anxiety. The adjustments to tariff policies by the Trump administration and concerns over an economic recession fueled a broad decline in the three major U.S. indexes, with tech stocks leading the downturn. The Nasdaq 100 index plummeted nearly 4%, marking its largest single-day drop since 2022. The cryptocurrency and corporate bond markets were also hit, with Bitcoin falling below the 80,000-dollar mark and several companies forced to cancel planned debt issuances.

The VIX volatility index soared and U.S. Treasury yields declined significantly, with the 10-year Treasury yield dropping 10.5 basis points to 4.213% and the 2-year Treasury yield falling to 4.539%. This series of signs indicates that concerns about the U.S. economic outlook are rapidly intensifying.

The Market Sell-off Intensifies, Tech Stocks Suffer Major Hits

All three major indexes fell more than 2%. The Dow Jones Industrial Average dropped 890.01 points, a decline of 2.08%, closing at 41,911.71 points. The Nasdaq plunged 727.90 points, a drop of 4.00%, closing at 17,468.32 points. The S&P 500 index fell 155.62 points, a decline of 2.70%, closing at 5,614.58 points. The S&P 500 is now just a step away from entering a technical correction zone, having fallen 5% in nine trading days, marking its worst performance since the onset of the pandemic in early 2020.

Tech stocks have been particularly hard hit in the current sell-off, with the combined market value of the "Big Seven" U.S. tech companies shedding over 830 billion dollars in a single day. Tesla's stock price plummeted 15.4%, recording its largest single-day drop since September 2020, as market concern grew over declining sales in China and Europe. Nvidia fell 5.1%, hitting a six-month low, while META, which had been the best performer earlier this year, relinquished all its gains.

More alarmingly, the major U.S. indexes have all broken below their key 200-day moving averages. The S&P 500 closed below this average for the first time since November 2023. Technical analyst Andrew Thrasher warns that if the index closes below the 200-day moving average for two consecutive days, it might indicate a market trend reversal.

Trump's Policies Trigger Market Unease, Institutional Portfolio Risks Intensify

The shift in market sentiment is closely related to Trump's recent policies. Since his return to office, Wall Street's optimism about his tax cuts and deregulation is being offset by increased tariffs and reduced government spending. Investors are concerned that these policies could lead to an economic slowdown or even a recession.

Trump and his advisers have hinted that the government is adjusting the trade balance, which may result in short-term "pain," and investors are bracing for it. Last week, Goldman Sachs reported that hedge fund single-stock liquidations reached the highest levels in two years, with some activities echoing the deleveraging behavior during the early pandemic in 2020.

James Koutoulas, CEO of Typhon Capital Management, warned that the market is currently undergoing a "deleveraging crisis," as highly leveraged hedge funds may continue to reduce their risk exposure, further dragging down the market. Andrew Taylor, Global Markets Intelligence Head at JPMorgan, stated that with high policy uncertainty, the risks of bottom-fishing in the short term are considerable.

Retail investor sentiment is also deteriorating sharply. A survey by the American Association of Individual Investors (AAII) indicates that for the first time since 2022, a majority of retail investors expect the stock market to decline in the next six months, with less than 20% believing there is still room for growth.

Concerns Over Economic Outlook, Market Prospects Remain Unclear

The Trump administration has been relatively nonchalant in response to the market turmoil. On Sunday, Trump downplayed the importance of market volatility in an interview and did not rule out the possibility of an economic recession. Last week, Treasury Secretary Besent stated that the U.S. economy is likely undergoing a "detoxification period," shifting from government spending-driven growth to private sector investment, which may lead to short-term growth slowdown.

If the White House itself is not optimistic about the short-term economic outlook, naturally, the market will remain cautious. If the Trump administration's "short-term pain" strategy fails to yield the expected outcomes, the U.S. economy could slip into a deeper recession.

Amid the intertwining of market volatility and policy uncertainty, the trajectory of the market in the coming weeks remains full of uncertainties, and investors need to closely monitor policy developments and further evolution of global market sentiment.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.