The global stock market experienced a significant sell-off on Monday, driven by growing concerns about a potential economic downturn in the United States. This downturn has sent ripples across various sectors, with technology stocks feeling the impact particularly acutely. The S&P 500 index declined by 2.7%, while the tech-heavy Nasdaq Composite saw a sharper drop of 4%, marking its worst day since 2022.
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Investor anxieties stem from the potential ramifications of US trade tariffs, which could exacerbate existing inflationary pressures and contribute to slower economic growth. These concerns were further fueled by comments made by US President Donald Trump in a recent interview, where he declined to dismiss the possibility of a recession occurring this year. He acknowledged a “period of transition” due to significant economic changes but expressed optimism about the long-term outlook.
Tesla’s Recent Stock Performance Under Scrutiny
Electric vehicle manufacturer Tesla (TSLA) experienced a substantial decline in its share price, plummeting over 15% on Monday and continuing its downward trajectory with a further 3% drop in pre-market trading on Tuesday. This recent downturn comes amidst growing criticism directed towards CEO Elon Musk, a prominent advisor to President Trump and head of the Department of Government Efficiency (DOGE).
Musk’s proposed plans for significant cuts across government agencies have sparked widespread protests at Tesla facilities nationwide. In a show of support, President Trump announced his intention to purchase a new Tesla via social media. Despite this gesture, Tesla’s stock continues to face headwinds.
Nvidia and the “Magnificent Seven” Face Market Pressures
The “Magnificent Seven”—a group of high-performing tech companies including Tesla, Nvidia, Apple, Meta, Microsoft, Amazon, and Alphabet—found themselves at the epicenter of Monday’s market sell-off, experiencing significant declines in their combined share price.
Chipmaker Nvidia (NVDA) witnessed a 5% drop, reducing its market capitalization to $2.6 trillion (£2 trillion) and pushing its stock to its lowest level since September. The company’s shares have been under pressure following the release of a lower-cost artificial intelligence (AI) model by Chinese competitor DeepSeek in late January. This development raised concerns among investors about the sustainability of high spending levels on AI by major US tech companies.
Adding to the pressure, Nvidia’s fourth-quarter results, released in late February, further dampened investor sentiment. While the company exceeded revenue and earnings expectations, its guidance on gross profit margins fueled anxieties about future growth prospects. Market strategist Jim Reid of Deutsche Bank noted that the “Magnificent Seven” have entered bear market territory, having lost over 20% of their value since their peak in December.
Conclusion: Uncertainty Clouds the Tech Sector
The recent market volatility underscores the prevailing uncertainty surrounding the tech sector. Concerns about economic growth, trade tensions, and increased competition are weighing heavily on investor confidence. While President Trump remains optimistic about the long-term economic outlook, the short-term trajectory remains unclear. The performance of tech giants like Tesla and Nvidia will continue to be closely monitored as indicators of broader market trends and economic health.
