U.S. stocks were slammed for a third day on Monday as the White House remained defiant even after President Donald Trump’s rollout of shockingly high tariff rates on most key U.S. trading partners has caused a market meltdown. The S&P 500
lost 4% on Monday, bringing its three-day losses to around 13%, a drop not seen in that short of time since 2008 during the Great Financial Crisis. If the benchmark closes at these levels, it will bring its losses from its closing record touched in February to 20%, a bear market in Wall Street terms.
The Dow Jones Industrial average
tumbled 1,363 points, or 3.5%, following back-to-back 1,500 point losses for the first time ever Thursday and Friday.
The Nasdaq Composite dropped 4%, further into bear territory, as investors sold their tech winners to raise cash. The Nasdaq is off 26% from its high.
Trump’s initial unilateral 10% tariff went into effect Saturday. Investors were hoping for news over the weekend that the Trump administration was having successful negotiations with countries to lower the tariff rates, or at the very least, was considering delaying the set of so-called reciprocal tariffs due to take effect April 9. Instead the president and his key advisors played down the sell-off:
Trump said Sunday evening on the market sell-off: “I don’t want anything to go down, but sometimes you have to take medicine to fix something.” Trump added, “We have a trillion-dollar trade deficit with China, hundreds of billions of dollars a year we lose with China. And unless we solve that problem, I’m not going to make a deal.”
Commerce Secretary Howard Lutnick told CBS News that the tariffs would not be postponed. “The tariffs are coming... They are definitely going to stay in place for days and weeks.”
Treasury Secretary Scott Bessent noted to NBC News that more than 50 countries have approached the administration for negotiations, but cautioned “they’ve been bad actors for a long time, and it’s not the kind of thing you can negotiate away in days or weeks.”
Investors were surprised first by the magnitude of certain rates applied to trading partners that appeared to be based on a formula without a valid rationale based on established economic theory. They were rattled further when China on Friday decided to retaliate with a 34% tariff on all U.S. imports, instead of negotiating first.
“The president is losing the confidence of business leaders around the globe...this is not what we voted for,” wrote Bill Ackman, billionaire head of Pershing Square, on X. “The President has an opportunity on Monday to call a time out and have the time to execute on fixing an unfair tariff system. Alternatively, we are heading for a self-induced, economic nuclear winter, and we should start hunkering down.”
While the administration said at least 50 nations had reached out to start negotiations, Canada and the European Union were planning to follow China’s lead and readying retaliatory tariffs against the U.S. Vietnam has offered already to cut tariffs on the U.S. to zero, according to Trump, but trade advisor Peter Navarro told CNBC on Monday that wasn’t enough and that it was the non-tariff cheating that matters. This suggests negotiations could be drawn out longer than Wall Street would like.
Fears grew on Wall Street that the sell-off would feed on itself with hedge funds forced to sell down equities and other risky assets to raise cash needed meet margin calls. The CBOE Volatility Index , Wall Street’s fear gauge, surged to the 50 level early Monday, an extreme level seen mostly only during bear markets.
“Margin calls are going out as we speak,” said Chris Rupkey chief economist at FWDBONDS. “For a third straight day investors in U.S. equity markets have turned (a) huge thumbs down on the White House Liberation Day tariffs which have rocked Wall Street.”
The contagion spread to other assets and around the globe. The price of bitcoin, tumbled below $77,000. U.S. crude oil dropped below $60 a barrel to a multiyear low. Hong Kong’s Hang Seng Index dropped 13% for its biggest decline since 1997. Germany’s DAX Index lost as much as 10% during Monday’s session.
Tesla led the early losses, down 8%. Caterpillar, a big seller of construction equipment around the world, fell 6% early Monday. Apple shares lost