The stock market has taken a significant hit since Donald Trump’s presidential win, with record highs evaporating in the face of escalating tariffs and fears of slow economic growth. The S&P 500 index is now down around 2% for the year, while the Nasdaq Composite is off over 5%.
Traders are spooked by the potential impact on inflation and the labor market, with US Treasury yields plummeting to levels not seen since late last year. This has led investors to expect a decrease in interest rates from the Federal Reserve, potentially prompting a slowdown in economic expansion.
Certain sectors initially expected to benefit under a Trump administration, such as small caps and energy, have also lagged since the election. Companies like Tesla and Twitter are suffering significant losses, with their stock prices falling over 30% and 50%, respectively.
The reversal of “Trump trade” has left many investors reeling, with fears of stagflation – a combination of slowing growth and rising prices – dominating markets. The situation is further complicated by survey data showing declining consumer confidence, weighing on markets.
As one economist noted, policy uncertainty appears to be impacting business and consumer confidence, but it’s unclear if this will translate into actual economic weakness.
Source: https://finance.yahoo.com/news/the-trump-trade-dominated-markets-post-election-its-now-floundering–and-heres-why-192921053.html