The US stock market witnessed a sharp selloff overnight on March 10, with major indices—the Nasdaq and S&P 500—plunging 4 per cent and 2.70 per cent, respectively, as concerns over a major trade war and economic slowdown in the world’s largest economy due to President Donald Trump’s trade policies spooked investors.
According to Reuters, Monday’s sharp selloff wiped out $4 trillion from the S&P 500’s peak in February.
Technology stocks in the US suffered their biggest intraday losses since 2022. It wasn’t just equities—several other asset classes, including corporate bonds, the US dollar and cryptocurrencies, also saw a significant selloff. US bond prices fell, driving yields higher as investors rushed to safe-haven assets amid a gloomy economic outlook.
Why did the US stock market crash?
Concerns over Trump’s tariffs and their economic fallout are seen as the key drivers for the sharp selloff in the US stock market.
Trump has announced a volley of new tariffs against several countries, including Canada, Mexico and China as well as reciprocal tariffs against India. This has raised uncertainty for businesses and investors.
There are heightened fears that Trump’s tariff policies and spending cuts could slow down the US economy and increase the risk of a recession.
The recent US macroeconomic data has given mixed signals about the world’s largest economy. The jobs report released last Friday showed employers added 1,51,000 jobs in February. This was up from January’s revised 1,25,000 figure but half as many as in November and December.
The expectations of further rate cuts by the US Fed have also diminished. As Mint reported earlier, US Federal Reserve Chair Jerome Powell has said that the central bank will likely keep its benchmark interest rate unchanged in the coming months as it waits for widespread uncertainty stemming from Trump’s policies.
A confluence of factors—concerns over Trump’s policies, the economic slowdown, waning expectations of US Fed rate cuts, and higher geopolitical uncertainty—are weighing on markets globally.
How can US stock market crash impact Indian stock market?
The Indian stock market is expected to see a negative start on Tuesday, tracking weak global cues.
The Indian stock market has already been under pressure due to heavy foreign capital outflow amid weak warnings and signs of economic slowdown. Trump’s tariff policies have added to uncertainty about economic growth, which could further accelerate foreign capital outflow.
Experts advise investors to focus on domestic consumption themes as export-oriented segments such as IT and pharma could witness high volatility.
“Investors can play it safe by focusing on domestic consumption themes which will not be impacted by the potential tariffs. Export-oriented segments like IT and pharma will be volatile in responding to news flows surrounding US actions,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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11 Mar 2025, 07:51 AM IST
