US stock market volatility has increased dramatically since Donald Trump returned to the White House. And while the market was initially "excited" about his election victory, it is now going through a rough patch. AIN's editorial team analyzes how Trump's policies are affecting the stock market and how Elon Musk is influencing it.
How did Trump's political statements affect the corporate indexes?
US stocks surged after Donald Trump won the presidential election, as investors anticipated tax cuts, deregulation, and his active role in economic policy. During his first term, the stock market performed well, and Trump frequently credited rising stock prices as proof of his policies' success.
However, his rhetoric has shifted, and he now rarely comments on market trends. Since his inauguration in January, stock indexes have declined almost daily. On March 4, Trump’s tariffs on imports from Canada, Mexico, and China—three of the US's largest trading partners—took effect, triggering significant volatility on Wall Street. The most dramatic market shift occurred on March 10.
Trump has twice refused to rule out a potential recession due to the new tariffs. On March 9, when asked by a Fox News host about the risk of an economic downturn, he neither confirmed nor dismissed the possibility.
According to Reuters, Trump’s policies and statements intensified the stock market sell-off.
- The S&P 500 fell 2.7%—its largest single-day drop of the year. By Monday, the index had declined 8.6% from its February 19 record high, wiping out over $4 trillion in market value. It approached a 10% drop, the threshold for an official market correction.
- The Nasdaq Composite Index, which tracks the US tech market, fell 4%, wiping out more than a trillion dollars in market value, according to Bloomberg. This was its biggest one-day drop since September 2022. On Thursday, the index closed more than 10% below its December high.
- By the end of trading, the Dow Jones Industrial Average had dropped 2,08%, reaching a new three-month low.
The seven most valuable tech companies collectively lost more than $750 billion in market value. Apple saw the biggest absolute loss, shedding approximately $174 billion in value.
Tesla suffered the largest percentage decline, with its stock plunging 15%, a drop of $130 billion, marking its worst single-day loss since 2020. Since peaking in mid-December, the company has lost more than half of its market value.
The cryptocurrency market also took a hit. It had surged by more than $500 billion after Trump announced plans for a strategic digital asset reserve, briefly sparking optimism. However, the rally quickly collapsed due to aggressive selling amid worsening macroeconomic conditions, Bloomberg reports.
On March tenth, Bitcoin fell 6,8% to $77,416, its lowest level since early November. The largest cryptocurrency has dropped 28% from its record high of $109,241, while the overall crypto market has lost more than $1 trillion in capitalization since its peak, according to CoinGecko.
Despite the sell-off, the Binance Fear and Greed Index rose to 24, indicating that market sentiment remains in a state of extreme fear.
How are Elon Musk and his DOGE affecting the stock market?
Elon Musk's chaotic actions at the Department of Government Efficiency (DOGE) are causing concern among companies that have government contracts or whose work is related to the government. A large number of federal employees have been fired and rehired, contracts have been canceled and renewed, etc.
As a result, dozens of companies are warning investors that the consequences of DOGE could negatively affect their financial results, The Washington Post reports.
Since November, the stock prices of the group of companies most likely to be affected by DOGE have plunged the S&P 500 Index by 20%, according to a February analysis by Barclays Investment Bank.
Elon Musk's work at DOGE is also having a negative impact on his companies. In an interview with the television network, he said that he was running his companies "with great difficulty" while working with the Trump administration.
On March 10, Musk lost $29 billion, his fortune dropping from $330 billion on Sunday to $301 billion the next day, not least because of the drop in Tesla stock. Tesla shares were down 55% from their peak in December. According to Bloomberg, the billionaire's fortune has fallen by $132 billion, or more than 30%, this year.
Today, March 13, Tesla shares rose 8.0% in morning trading, but were still trading 48% below last year's high at the time of writing.
