Key Takeaways
• Stocks are falling as investors fret over the outlook for the US economy.
• Large-cap growth stocks have been hit the hardest as the mega-cap technology trade unwinds.
• Value stocks have declined but withstood the selloff better than growth.
US stocks fell Monday, adding to recent declines, as investor anxiety over a rapidly changing economic outlook permeated markets. With a trade war building and confusion about US tariff policies, increased concerns about the possibility of a recession, and sticky inflation, selling has been especially heavy among the growth stocks that led the bull market for the past two years.
The Morningstar US Market Index fell as low as 3.57% in midafternoon trading before paring some losses to close down 2.78%. Large-cap growth names dropped an eyewatering 4.38%. Value stocks escaped the worst of the damage, with the large-cap value corner of the Morningstar Style Box down 1.03% on the day.
Leading the market south were the mega-cap tech giants that until recently were responsible for the lion’s share of its gains. Nvidia NVDA closed 5% lower, shares of Tesla TSLA fell more than 15%, and Palantir PLTR was down 10%.
Meanwhile, the yield on the 10-year US Treasury note dropped to 4.22%, continuing its downward slide as investors seek safety in fixed income. Bond yields move in the opposite direction of prices.
Economic Worries Rattle Investors
Over the weekend, President Donald Trump signaled that more pain could be on the way for markets and the economy. When asked about the possibility of a recession this year in an interview with Fox News, the president referred to a “period of transition” as his policy priorities are implemented.
Investors were already rattled after a volatile week. Monday’s slide extended losses that followed fraught back-and-forth between the United States, Canada, and Mexico over new 25% tariffs.
The US Market Index has lost 4.2% over the past week. Large-cap growth stocks have fallen nearly 8%.
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