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US President Donald Trump’s tariffs have spooked investors, with fears of an economic downturn driving a stock market sell-off that has wiped out $4 trillion from the S&P 500’s peak last month, when Wall Street was cheering much of Trump's agenda, Reuters reported.

A barrage of new Trump policies has increased uncertainty for businesses, consumers and investors, notably back-and-forth tariff moves against major trading partners like Canada, Mexico and China.

“We've seen clearly a big sentiment shift,” said Ayako Yoshioka, senior investment strategist at Wealth Enhancement. “A lot of what has worked is not working now.”

The stock market sell-off deepened on Monday. The benchmark S&P 500 fell 2.7%, its biggest daily drop of the year. The Nasdaq Composite slid 4%, its largest one-day decline since September 2022.

The S&P 500 on Monday closed down 8.6% from its February 19 record high, shedding over $4 trillion in market value since then and nearing a 10% decline that would represent a correction for the index. The tech-heavy Nasdaq ended Thursday down more than 10% from its December high.

Trump over the weekend declined to predict whether the US could face a recession as investors worried about the impact of his trade policy.

“The amount of uncertainty that has been created by the tariff wars with regard to Canada, Mexico and Europe, is causing boards and C-suites to reconsider the pathway forward,” Peter Orszag, CEO of Lazard, speaking at the CERAWeek conference in Houston, according to Reuters.

“People can understand ongoing tensions with China, but the Canada, Mexico, and Europe part is confusing. Unless that gets resolved over the next month or so, this could do real damage to the economic prospects of the US and M&A activity,” Orszag said.

Delta Air Lines on Monday slashed its first-quarter profit estimates by half, sending its shares down 14% in aftermarket action. CEO Ed Bastian blamed heightened US economic uncertainty.

Investors are also watching whether lawmakers can pass a funding bill to avert a partial federal government shutdown. A US report on inflation looms on Wednesday.

“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,” said Ross Mayfield, investment strategist at Baird. “I think that's a big wake-up call for Wall Street.”

The percentage of total corporate equities and mutual fund shares that are owned by the bottom 50% of the US population, ranked by wealth, stands at about 1%, while the same measure for the top 10% of the population by wealth stood at 87%, according to Federal Reserve Bank of St. Louis data as of July 2024.

The S&P 500 tallied back-to-back gains of over 20% in 2023 and 2024, led by mega-cap technology and tech-related stocks such as Nvidia and Tesla that have struggled so far in 2025, dragging major indexes.

On Monday, the S&P 500's technology sector dropped 4.3%, while Apple and Nvidia both fell about 5%. Tesla tumbled 15%, shedding about $125 billion in value.

Other risk assets were also punished, with bitcoin dropping 5%.

Some defensive areas of the market held up better, with the utilities sector logging a 1% daily gain. Safe-haven US government debt saw more demand, with benchmark 10-year Treasury yields, which move inversely to prices, down to about 4.22%.

Investorunease

The S&P 500 has given up all gains recorded since Trump's November 5 election, and it is down nearly 3% in that time. Hedge funds reduced exposure to stocks on Friday at the largest amount in more than two years, according to a Goldman Sachs note released on Monday.

Investors had expressed optimism that Trump's expected pro-growth agenda including tax cuts and deregulation would benefit stocks, but uncertainty over tariffs and other changes including federal workforce cuts has dampened sentiment.

“It was the overwhelming consensus that everything was going to be this great environment once President Trump came into office,” said Michael O’Rourke, chief market strategist at JonesTrading.

“Every time you have structural change you're going to have uncertainty and you're going to have friction,” O'Rourke said. “It's understandable people are starting to be a little concerned and starting to take profits.”

Even with the recent sell-off, stock market valuations remain significantly above historic averages. The S&P 500 as of Friday was at just above 21 times earnings estimates for the next year, compared to its long-term average forward P/E of 15.8, according to LSEG Datastream, Reuters reported.

“Many people have been worried about elevated valuations among US equities for some time and looking for the catalyst for a market correction,” said Dan Coatsworth, investment analyst at AJ Bell. “A combination of concerns about a trade war, geopolitical tensions and an uncertain economic outlook could be that catalyst.”

Investors' equity positioning has fallen in recent weeks, dipping to slightly underweight for the first time since briefly hitting that level in August, Deutsche Bank analysts said in a note on Friday.

A further retreat to the bottom of the historic range for equities weighting, as seen during Trump's US-China trade war in 2018-2019, could drag the S&P 500 to as low as 5,300, or down another 5.5% from current levels, they added.

In another sign of growing investor unease, the Cboe Volatility Index on Monday reached its highest closing level since August.

The administration is “still trying to figure out how to define a win politically, economically, and what is the right time frame,” said Edward Al-Hussainy, senior interest rate and currency analyst at Columbia Threadneedle Investments. “And until they do that, it's going to be like this every week.”

Secretary of State Marco Rubio said on Monday that Ukraine would have to make concessions over land that Russia had taken since 2014 as part of any agreement to end the war, The New York Times reported. 

Rubio spoke as he was flying to Jeddah, Saudi Arabia, for talks with senior Ukrainian officials, and 10 days after a contentious White House meeting between President Trump and his Ukrainian counterpart, Volodymyr Zelensky. The Trump administration halted military aid to Ukraine after the blowup, which centered on Mr. Trump’s refusal to include any security guarantees in a proposed deal involving Ukraine’s natural resources.

“The most important thing that we have to leave here with is a strong sense that Ukraine is prepared to do difficult things, like the Russians are going to have to do difficult things to end this conflict or at least pause it in some way, shape or form,” Mr. Rubio told reporters.

Rubio declined to offer the outline of a potential agreement but made clear that concessions by both sides would be central to diplomacy.

“I think both sides need to come to an understanding that there’s no military solution to this situation,” Mr. Rubio said. “The Russians can’t conquer all of Ukraine, and obviously it’ll be very difficult for Ukraine in any reasonable time period to sort of force the Russians back all the way to where they were in 2014.”

Rubio added that it would be imperative in future talks with Moscow to determine what Russia was willing to concede, according to The New York Times. 

“We don’t know how far apart they truly are,” Rubio said.

The talks on Tuesday likely will not delve into the proposed agreement on Ukrainian natural resources that Mr. Trump had described as compensation for U.S. military support during the three years since Russia’s full-scale invasion. He has said that an American financial interest in Ukrainian fossil fuels and rare-earth minerals would provide Ukraine with implied security.

Although the United States has stopped sharing some intelligence with Ukraine, including satellite imagery, Rubio said it was still providing Kyiv with information that allowed it to continue defending itself against Russian attacks. He also said that there had never been a threat of removing Ukraine’s access to Starlink, the internet service company owned by Elon Musk’s SpaceX.

Even as the United States has been pressuring Ukraine in recent weeks, Mr. Trump has also threatened to impose additional sanctions on Russia in response to Moscow’s continued military activity. Rubio said that the United States was trying to demonstrate that it still had ways to coerce Russia in an effort to bring it to the negotiating table with Ukraine.

Rubio said he and Ukrainian officials would most likely discuss the resumption of military assistance during the meetings on Tuesday. He said the U.S. position on the issue could change if he believed that Ukraine was seriously committed to peace.

“I can assure you this, we will not be providing military aid to the Russians,” Rubio said.

US Secretary of State Marco Rubio and Elon Musk have clashed with Poland's foreign minister over the use of the tech billionaire's Starlink satellite internet system in Ukraine, BBC reported.

Musk said on X that Ukraine's "entire front line" would collapse if he turned the system off. Radoslaw Sikorski responded, saying his country paid for its use in Ukraine and a threat to shut it down would result in a search for another network.

Rubio dismissed Sikorski's claims and told him to be grateful, while Musk called him a "small man".

The exchange appeared to lead to Polish PM Donald Tusk calling on his country's allies to show respect for their weaker partners, rather than arrogance.

Starlink's system is part of SpaceX's venture to provide high-speed internet to remote and underserved areas. It has been used extensively by the Ukrainian military, according to BBC.

Sunday's exchange started when Musk posted that Starlink was the "backbone of the Ukrainian army" and that "their entire front line would collapse if I turned it off".

Sikorski then responded, saying that Poland was paying for the service.

"Starlinks for Ukraine are paid for by the Polish Digitization Ministry at the cost of about $50 million per year," Sikorski wrote. "The ethics of threatening the victim of aggression apart, if SpaceX proves to be an unreliable provider we will be forced to look for other suppliers."

Getty Images Polish Foreign Minister Radosław Sikorski in front of a microphone in a jacket and red tie

In response, Rubio said Sikorski was "just making things up... no-one has made any threats about cutting Ukraine off from Starlink".

 "And say thank you because without Starlink Ukraine would have lost this war long ago and Russians would be on the border with Poland right now," he added.

Musk later responded to Sikorski's post calling him a "small man".

"Be quiet, small man. You pay a tiny fraction of the cost. And there is no substitute for Starlink," he wrote.

On Monday morning Polish Prime Minister Tusk, without specifying who or what he was referring to, wrote on X: "True leadership means respect for partners and allies, BBC reported.

"Even for the smaller and weaker ones. Never arrogance. Dear friends, think about it."

The Starlink terminals are key to Ukraine's army operations and have been used since the start of the Russian invasion in February 2022.

There are tens of thousands of terminals in the country, including up to 500 bought by the US Department of Defence in June 2023.

Thousands of supporters greeted Nepal’s former king in capital Kathmandu on Sunday and demanded his abolished monarchy be reinstated and Hinduism brought back as a state religion, Associated Press reported.

An estimated 10,000 supporters of Gyanendra Shah blocked the main entrance to Kathmandu’s Tribhuvan International Airport as he arrived from a tour of western Nepal.

“Vacate the royal palace for the king. Come back king, save the country. Long live our beloved king. We want monarchy,” the crowds chanted. Passengers were forced to walk to and from the airport.

Hundreds of riot police blocked the protesters from entering the airport and there was no violence.

Massive street protests in 2006 forced Gyanendra to give up his authoritarian rule, and two years later the parliament voted to abolish the monarchy as Gyanendra left the Royal Palace to live the life of a commoner.

But many Nepalis have grown frustrated with the republic, saying it has failed to bring about political stability and blaming it for a struggling economy and widespread corruption. Nepal has had 13 governments since the monarchy was abolished in 2008.

Rally participants said they were hoping for a change in the political system to stop the country from further deteriorating, according to Associated Press.

“We are here to give the king our full support and to rally behind him all the way to reinstating him in the royal throne,” said Thir Bahadur Bhandari, 72.

Among the thousands was 50-year-old carpenter Kulraj Shrestha, who had taken part in the 2006 protests against the king but has changed his mind and now supports the monarchy.

“The worst thing that is happening to the country is massive corruption and all politicians in power are not doing anything for the country,” Shrestha said. “I was in the protests that took away monarchy hoping it would help the country, but I was mistaken and the nation has further plunged so I have changed my mind.”

Gyanendra has not commented on the calls for the return of monarchy. Despite growing support for the former king, Gyanendra has slim chances of immediately returning to power.

He became the king in 2002, after his brother and family were massacred in the palace. He ruled as the constitutional head of state without executive or political powers until 2005, when he seized absolute power. He disbanded the government and parliament, jailed politicians and journalists and cut off communications, declaring a state of emergency and using the army to rule the country.