U.S. stocks face the worst single-day drop since 2025, with high risks of a NASDAQ bear market

According to Zhitong Finance APP, on Monday, the U.S. stock market experienced its worst single-day decline since 2025, with investors warning that the market may continue to fall in the future, and the technology-driven NASDAQ Composite Index may even enter a bear market. The Trump administration's failure to quell market concerns about a U.S. economic recession further exacerbated market panic.

Among them, the NASDAQ index suffered particularly heavy losses, dropping 727.90 points throughout the day, a decline of 4%, closing at 17,468.32 points, marking a new low since September 11, 2024. This decline is the largest single-day drop since September 13, 2022. Last week, the NASDAQ had already entered a technical correction zone, having fallen more than 10% from its recent high. If the decline reaches 20%, the NASDAQ will officially enter a bear market. As of Monday's close, the index has cumulatively fallen 13.4% from its historical high of 20,173.89 points set on December 16, 2024.

Meanwhile, the Dow Jones Industrial Average fell 890.01 points, a decline of 2.08%, closing at 41,911.71 points. It once dropped 1,189 points during the day. The S&P 500 index fell 155.64 points, a decline of 2.7%, closing at 5,614.56 points, down 8.6% from its historical high of 6,144.15 points set on February 19, 2025.

Peter Cardillo, Chief Market Economist at Spartan Capital Securities, stated on Monday, "This trend may continue." He pointed out that the NASDAQ index has entered a correction zone, while the S&P 500 index is also on the edge of a correction, which may lead to further market sell-offs until market sentiment is fully released. He added, "Is it too early to talk about a bear market? Based on the performance of the NASDAQ, the likelihood of a bear market is already quite high."

In the face of market panic, U.S. President Trump attempted to downplay the impact of tariff policies on business during an interview last Sunday. He stated that he does not rule out the possibility of an economic recession this year: "I am reluctant to predict such a situation." He said, "We are going through a transition period because we are making very significant adjustments."

Meanwhile, Kevin Hassett, Director of the White House National Economic Council, attempted to reassure the market about concerns over an economic recession during an interview on Monday. However, Cardillo from Spartan Capital stated, "But the market itself is already sending signals." He added that the U.S. bond market has already been "flashing recession alarms," and Treasury yields may continue to decline in the future.

Tom Essaye, founder of Sevens Report Research, pointed out in a report on Monday that the market's plunge stems from a surge in uncertainty, primarily due to concerns over tariff policies, the upcoming debt ceiling negotiations, and the Trump administration's attempts to extend the tax cuts implemented during its first term He stated that investors' fear lies in the uncertainty that may lead companies and consumers to adopt a wait-and-see attitude, which could trigger an economic slowdown and impact the profitability of the S&P 500 index.

Essaye believes that if these concerns materialize, the S&P 500 index could face a correction of 10% or more. However, he also emphasized that the current market decline is primarily due to panic rather than a genuine deterioration in economic data. Corporate earnings remain robust, and analysts have not yet broadly downgraded earnings expectations.

The yield on the U.S. benchmark 10-year Treasury note has fallen from a previous high of 4.8% to 4.218%, indicating that concerns about an economic slowdown have surpassed worries about inflation. Typically, bond yields move inversely to price trends, and a decline in yields usually suggests that the market expects the Federal Reserve may take measures to cut interest rates in the event of economic deterioration.

Federal Reserve Chairman Jerome Powell stated last Friday that the U.S. economy remains in good shape. However, as the trade war with major trading partners escalates, market sentiment has noticeably worsened, and investors are beginning to question whether the Federal Reserve can continue its cautious pace of interest rate cuts.

Gennadiy Goldberg, head of U.S. interest rate strategy at TD Securities, stated, "The market has quickly shifted from optimism to pessimism in just a few weeks."

Investors not only face uncertainty regarding the Trump administration's policies on tariffs, immigration, and economic matters but also need to be aware of the risk that the U.S. government may face a shutdown this Friday due to Congress's failure to reach an agreement. Goldberg noted, "What the bond market is really worried about is the slowdown in growth, and the uncertainty surrounding the trade war and fiscal policy has further exacerbated these concerns."