NEW YORK: A brutal Wall Street wipeout has erased a staggering $4 trillion in market capitalisation from the S&P 500, deepening concerns about the global economic outlook. Surging inflation, trade tensions, and fears of a looming US recession have rattled investor confidence, triggering a sharp sell-off that has sent shockwaves across financial markets.
The S&P 500 tumbled 2.7 per cent on Monday, extending its recent losing streak, while the Nasdaq Composite plunged 4 per cent, marking its worst single-day drop since September 2022. The wipeout has now dragged the S&P 500 down 8.6 per cent from its February peak, with analysts warning of further downside risks.
The latest Wall Street wipeout has effectively erased all post-election gains, as investors reassess the impact of President Donald Trump’s aggressive trade stance. The sell-off intensified after Trump, when asked whether his tariffs could trigger inflation or a recession, nonchalantly responded, “You may get it.”
Tech stocks take a beating
The sell-off hit tech stocks the hardest, with high-flying giants bearing the brunt of investor panic. Apple and Nvidia each lost around 5 per cent, while Tesla plunged 15 per cent, wiping out $125 billion in market value in a single day. The S&P 500’s technology sector fell 4.3 per cent, signaling a sharp reversal from the growth-driven rally that dominated markets in recent years.
“The market is reacting to heightened uncertainty – trade policies, inflationary risks, and potential economic contraction,” said Arindam Mandal, Head of Global Equities at Marcellus Investment Managers. “Investors are now recalibrating expectations in a climate of growing macroeconomic instability.”
Adding to the turmoil, Delta Air Lines slashed its first-quarter profit forecast by half, citing weaker corporate spending and declining demand. CEO Ed Bastian warned that economic uncertainty is weighing on business travel, raising broader concerns about consumer confidence.
Indian markets hold ground
While global markets reel, Indian equities have shown relative resilience. The Nifty 50 has slipped 15% from its September peak but has managed to outperform Wall Street.
“A significant consequence of this sell-off is that Indian markets are holding up better than their US counterparts,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “Over the past month, the S&P 500 has fallen 7.5 per cent, while the Nifty 50 is down only 2.7 per cent.”
However, caution remains. Mid-cap and small-cap stocks in India continue to trade at elevated valuations, with brokerage firm Motilal Oswal warning that they remain overvalued by 22-25 per cent%, suggesting room for further correction.
What lies ahead?
With Wall Street in turmoil, investors are split on whether this marks the beginning of a deeper bear market or a temporary correction. Analysts at UBS remain cautiously optimistic, pointing to potential upside in the medium term – but warn that political and economic risks remain high.
The Cboe Volatility Index (VIX), often referred to as the “fear gauge,” has spiked to its highest level since August, signaling heightened market anxiety. Concerns over a possible US government shutdown, escalating tariffs, and slowing economic growth could further weigh on sentiment.
“The ideal strategy now is not to panic,” Dr Vijayakumar advised. “Long-term investors should focus on accumulating high-quality stocks selectively, particularly in large caps.”
As markets remain on edge, investors brace for more volatility, with Trump’s policies continuing to shape the economic landscape in unpredictable ways.
