KUALA LUMPUR – The US stock market took a hard hit this week, with major indices seeing sharp drops as fears of a possible recession grow. President Donald Trump’s latest economic policies and public statements have fueled uncertainty, adding to investor concerns.
Tech stocks were among the worst affected, with Tesla leading the slump as its stock nosedived 15% on Monday, wiping out all its gains since the US presidential election in November.
The stock’s drop hit Musk personally as well as his net worth took a US$29 billion dive in a single day, according to the Bloomberg Billionaires Index.
The S&P 500 fell nearly 3% on Monday, bringing its losses to 9% since reaching a record high in February. The Nasdaq suffered its worst trading day since September 2022, dropping 4%, while the Dow Jones Industrial Average lost around 400 points on Tuesday after already sliding the day before.
Other tech giants, including Nvidia, Apple, and Alphabet, also saw their stocks tumble by more than 5%.
Trump says ‘radical leftists’ boycotting Tesla
Despite Tesla’s troubles, President Donald Trump showed support for Musk, praising him on Truth Social early Tuesday morning.
“Elon Musk is ‘putting it on the line’ in order to help our Nation, and he is doing a FANTASTIC JOB!” Trump wrote.
“I’m going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk, a truly great American.”
Musk later acknowledged Trump’s support on his X platform.
However, Musk’s political connections have sparked mixed reactions among investors. Some had hoped his relationship with Trump would benefit Tesla by easing regulations and cutting subsidies for rival EV makers.
Trump also accused left-wing activists of orchestrating a boycott against Tesla.
“Radical leftists are illegally and collusively boycotting Tesla so they can attack and do harm to Elon, and everything he stands for,” he wrote on Truth Social.
Meanwhile, market analysts remain cautious about Tesla’s future. Musk himself responded to a user on X, saying that Tesla’s stock performance would “be fine long-term.”
Possible recession?
The market’s sudden downturn has sparked fresh concerns about a possible recession. Just weeks ago, the US economy seemed stable, with steady GDP growth projections.
However, recent developments – such as proposed tariffs and potential federal budget cuts – have shaken investor confidence.
Former Treasury Secretary Larry Summers told CNN that a recession is now a “real possibility,” warning that a weakened economy could trigger a chain reaction of declining markets and financial instability.
Bill Dudley, former president of the New York Federal Reserve, also said that recession risks have “definitely increased.”
David Kelly, chief global strategist at JPMorgan Asset Management, explained the uncertainty’s impact on business confidence.
“Right now, a lot of businesspeople are like deer in headlights. That’s a very dangerous place to be,” he said.
Goldman Sachs has raised its estimated probability of a US recession in the next 12 months to 20%, up from 15%, citing growing concerns over trade policies. The bank warns that if the White House continues pushing aggressive tariffs, the likelihood of a recession could increase further.
Market uncertainty lingers
As the stock market remains volatile, investors are closely watching policy moves from Washington. Trump’s latest tariffs, including a planned 50% tariff on steel and aluminum imports from Canada, have added to the uncertainty.
“This is a very resilient economy. It can take a licking and keep on ticking. But it doesn’t like this uncertainty,” said JPMorgan’s Kelly.
Despite stable job market indicators, analysts warn that market instability could spill over into the broader economy. Consumer confidence has already weakened in recent months, and companies like Delta Air Lines have issued profit warnings, citing lower corporate and consumer spending.
With recession fears growing, investors are now paying close attention to policy decisions from the White House and signals from the Federal Reserve regarding potential interest rate moves. – March 12, 2025