Nasdaq 12% down, S&P 7%: Why US markets are shaking since Trump took office

Wall Street is facing its worst start to a year since 2022, with major indices plunging as investor optimism surrounding President Donald Trump’s return to the White House fades.

Despite early-year enthusiasm for a more business- and crypto-friendly administration, concerns over inflation and trade tensions have dragged down US markets.

The S&P 500 is on track for its worst quarter since 2022, falling more than 5 per cent since the start of the year. On Monday (March 31), it slipped another 0.8 per cent, while the Nasdaq sank 1.9 per cent.

The tech-heavy Nasdaq Composite has taken the biggest hit, falling 12.44 per cent since Trump took office in January. The index closed at 12,799.29 on March 31, down from 19,756.78 on January 21 — the day after Trump’s inauguration.

Other major indexes have also declined, though less sharply. The S&P 500 dropped 7.23 per cent over the same period, from 6,049.24 to 5,611.83. The Dow Jones Industrial Average fell 4.5 per cent, closing at 42,001.76 this week compared to 44,025.81 on Inauguration Day.

Crypto downturn adds pressure

Cryptocurrencies, a sector many hoped would thrive under Trump, have also tumbled.

Bitcoin, which had surged to $106,000 in the days around the inauguration, has dropped 21.2 per cent, currently trading near $83,400.

Ethereum has suffered an even steeper decline, falling 43.28 per cent from $3,269.74 to $1,854.51 since January 21.

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Inflation fears and trade policy uncertainty

Analysts say investor sentiment is being shaken by fresh signs of persistent inflation and ambiguity surrounding Trump’s tariff strategy. The potential for a renewed trade war has cast a shadow over global markets.

The tariff threat “ups the risk premium that you put on equities” Financial Times quoted Sharon Bell, senior equities strategist at Goldman Sachs, as saying. She did, however, add that the US stock market has “other issues — some of the DOGE cuts, for example, and the general slowing in the pace of growth.”

Goldman Sachs now places the likelihood of a US recession at 35 per cent, up from its earlier estimate of 20 per cent. The bank has also cut its US GDP growth forecast for 2025 to 1.5 per cent from 2.0 per cent.

It expects three rate cuts from both the Federal Reserve and the European Central Bank this year (one more than previously forecast) as policymakers react to global market volatility.

As investors brace for uncertainty, they are also likely moving away from stocks into safer assets such as government bonds. Market participants are also likely to dumping risky assets like cryptocurrencies.