Stock sell-off worsens as Wall Street wonders how much pain Trump will accept for the economy

NEW YORK (AP) — The U.S. stock market’s sell-off is worsening Monday as Wall Street questions how much pain President Donald Trump is willing for the economy to endure in order to get what he wants.

The S&P 500 was down 2.2% in afternoon trading, coming off its worst week since September. The Dow Jones Industrial Average was down 530 points, or 1.2%, as of 12:56 p.m. Eastern time, and the Nasdaq composite was 3.6% lower.

The main measure of the U.S. stock market is on track for a seventh swing of more than 1%, up or down, in the last eight days following a scary stretch dominated by Trump’s on -and- off -again tariffs. The worry is that the whipsaw moves will either hurt the economy directly or create enough uncertainty to drive U.S. companies and consumers into an economy-freezing paralysis. The S&P 500 is down 8% from its all-time high set on Feb. 19.

The economy has already given some signals of weakening, mostly through surveys showing increased pessimism. And a widely followed collection of real-time indicators compiled by the Federal Reserve Bank of Atlanta suggests the U.S. economy may already be shrinking.

Asked over the weekend whether he was expecting a recession in 2025, Trump told Fox News Channel: “I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing.” He then added, “It takes a little time. It takes a little time.”

Trump says he wants to bring manufacturing jobs back to the United States, among other reasons he’s given for tariffs. His Treasury secretary, Scott Bessent, has also said the economy may go through a “detox” period as it weans itself off an addiction to spending by the government.

The U.S. job market is still showing stable hiring at the moment, to be sure, and the economy ended last year running at a solid rate. But economists are marking down their forecasts for how the economy will perform this year.

At Goldman Sachs, for example, David Mericle cut his estimate for U.S. economic growth to 1.7% from 2.2% for the end of 2025 over the year before, largely because tariffs look like they’ll be bigger than he was previously forecasting.

He sees a one-in-five chance of a recession over the next year, raising it only slightly because “the White House has the option to pull back policy changes” if the risks to the economy “begin to look more serious.”

“There are always multiple forces at work in the market, but right now, almost all of them are taking a back seat to tariffs,” according to Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.

The worries hitting Wall Street have so far been hurting some of its biggest stars the most. Big Tech stocks and companies that rode the artificial-intelligence frenzy in recent years have slumped sharply.

Nvidia fell another 4.5% Monday to bring its loss for the year so far to 19.8%. It’s a steep drop-off from its nearly 820% surge over 2023 and 2024.

Elon Musk’s Tesla fell 12% to deepen its loss for 2025 to more than 40%. After getting an initial post-election bump on hopes that Musk’s close relationship with Trump would help the electric-vehicle company, the stock has since slumped on worries that its brand has become intertwined with Musk. Protests against the U.S. government’s efforts to cull its workforce and other moves have targeted Tesla dealerships, for example.

Stocks of companies that depend on U.S. households feeling good enough about their finances to spend also tumbled sharply. United Airlines lost 6.2%, and cruise-ship operator Carnival fell 7.4%.

It’s not just stocks struggling. Investors are sending prices lower for all kinds of investments whose momentum had earlier seemed nearly impossible to stop at times, such as bitcoin.

The cryptocurrency’s value has dropped below $80,000 from more than $106,000 in December.

Instead, investors have been herding into U.S. Treasury bonds as they look for things whose prices can hold up better when the economy is under pressure. That has sent prices for Treasurys sharply higher, which in turn has sent down their yields.

The yield on the 10-year Treasury tumbled again to 4.23% from 4.32% late Friday. It’s been dropping since January, when it was approaching 4.80%, as worries about the economy have grown. That’s a major move for the bond market.

All the uncertainty, though, hasn’t shut down dealmaking on Wall Street. Redfin’s stock jumped 64% after Rocket said it would buy the digital real estate brokerage in an all-stock deal valuing it at $1.75 billion. Rocket’s stock sank 17.4%.

ServiceNow fell 6.7% after the AI platform company said it was buying AI-assistant maker Moveworks for $2.85 billion in cash and stock.

In stock markets abroad, European indexes largely fell following a mixed session in Asia.

Indexes fell 1.8% in Hong Kong and 0.2% in Shanghai after China said consumer prices fell in February for the first time in 13 months. It’s the latest signal of weakness for the world’s second-largest economy, as persistent weak demand was compounded by the early timing of the Lunar New Year holiday.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.