Tesla, Palantir, MSTR, ARKK all fell sharply, retail investors in the US stock market collapsed

Concerns about recession continue to rise, and the sell-off in U.S. stocks persists! Investors are fleeing risk assets on a large scale.

On Monday, popular retail stocks and tech stars that had performed strongly after Trump's election were hit hard. Social media company Reddit plummeted 20%, marking its worst single-day performance since going public, while retail favorites Tesla and Palantir fell over 10% in a single day, and Bitcoin-related stock MSTR crashed 17%. "Cathie Wood's" flagship fund ARKK dropped 8.8%.

Tesla had surged significantly after Trump won the election last November but has now fallen over 50% from its December peak; MSTR has also dropped 50% from its November high.

Kevin Caron, senior portfolio manager at Washington Crossing Advisors, commented:

“The market has made a significant adjustment to growth expectations, with investors shifting from higher-risk, lower-quality stocks to high-quality targets. It is currently difficult to see where the market will find a bottom.”

Tech Stocks Become the Main Target of the Sell-off

In this wave of selling, the primary targets are tech stocks, which have been the main drivers of the U.S. stock market's bull run over the past two and a half years.

According to statistics, since the S&P 500 index hit an all-time high on February 19, the "Mag7" stock index has cumulatively fallen 17%, and a basket of unprofitable tech companies tracked by Goldman Sachs has dropped 24% since its December peak.

In the ETF market, leveraged ETFs that are highly correlated with speculative stocks have suffered even greater losses. A fund that provides double returns on MSTR has plummeted 84% since its peak last fall, while a similar fund related to Tesla has dropped 82% since its December peak.

Last week, President Trump warned that the American public might experience a "small disruption" due to his efforts to restructure the economy through tariffs. Analysts pointed out that this indicates that poor economic signals, from rising unemployment to sticky inflation, may not be temporary and could further exacerbate traders' concerns.

Sudden Shift in Expectations for Trump's Policies

Some media analyses pointed out that the recent declines in the U.S. stock market reflect a substantial shift in investors' understanding of the Trump administration's policies.

Initially, investors expected the new government to boost the economy through pro-growth policies, leading to a wave of speculation from cryptocurrencies to tech giants after Trump's election, as investors bet that his administration would reduce regulation and encourage investment.

Now, these bets are being rapidly unwound as investors turn their attention to some of Trump's strategies, particularly tariff policies, which have created significant uncertainty and could push the U.S. toward recession.

Anthony Saglimbene, chief market strategist at Ameriprise, stated:

“The initial profit-taking has evolved into hot money flowing out, as we see concerns about growth prospects and tariffs escalating. People are now more inclined to sell and wait for more certainty on a macro level before making decisions.”