Only a few months ago, stocks traded at consistent record levels as Donald Trump’s presidential win fueled a bullish Wall Street high on the hopes of pro-business policies and lower taxes.
Flash forward to today: That euphoria has all but evaporated. Trump’s tariff war escalation has sparked fears of slow economic growth while, at the same time, inflation remains stubbornly elevated. Softer data has also spooked investors in recent weeks, marking the return of “bad news for the economy is bad news for stocks.”
Here’s the damage:
On Tuesday, the benchmark S&P 500 (^GSPC) joined the tech-heavy Nasdaq (^IXIC) in eliminating its post-election gains as stocks deepened their sell-off with fresh tariffs on Canada, Mexico, and China now officially in effect.
The S&P 500 has erased about $3.3 trillion in market cap since its record closing high of 6,144.15 on Feb. 19. At that time, the benchmark index’s post-election gains had been hovering at just around 6%.
Since the start of 2025, the S&P 500 is down around 2%, while the Nasdaq Composite is off over 5% and has flirted with correction territory in recent sessions. The blue-chip Dow (^DJI) is trading just below the flatline for the year.
“Many of the key trends in financial markets in the run-up to and immediate aftermath of the US election last November have stalled or partly reversed since President Trump took office last month,” Jonas Goltermann, deputy chief markets economist at Capital Economics, wrote in a note last week.
He added, “In other words, the ‘Trump trade’ narrative that dominated many markets in Q4 is floundering.”
US Treasury yields are now trading at levels not seen since late last year as investors worry Trump’s tariffs will hurt economic expansion and dampen the labor market, potentially prompting the Federal Reserve to lower the cost of borrowing even as risks of higher prices remain.
Read more: What Trump’s tariffs mean for the economy and your wallet
The 10-year yield (^TNX) has sunk around 60 basis points from its January high to trade at just around 4.2%. As Citi analyst Stuart Kaiser said on Monday, “Rates are lower for the ‘wrong’ reasons.”
The US dollar, meanwhile, has also retreated after initially surging to kick off the year. Since the inauguration, the US Dollar Index (DX-Y.NYB), which measures the dollar’s value relative to a basket of currencies (the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc), has fallen over 2%.