The S&P 500 and the NASDAQ have experienced significant drops, reaching their lowest levels since September 2024, as indicated in the recent market updates. This slowdown, which began in early March 2025, was attributed to multiple factors, including increased recession fears, economic uncertainty and the potential impact of trade policies, such as the prices proposed by the Trump administration. The S&P 500 saw its greatest decrease of one day of the year on March 10, 2025, lowering by 2.7%, while the NASDAQ experienced an even higher drop by 4%, marking its worst day since September 2022.
These reductions followed a week when the S&P 500 recorded its worst performance since September 2024, down 3.1%, and the NASDAQ entered the correction territory, defined as a 10% drop in recent summits. The technological sector has been particularly hard, large companies like Tesla, Nvidia, Alphabet and Meta noting a significant decrease in the equity prices, contributing to the net decline in Nasdaq. The feeling of investors was more shaken by concerns concerning a potential economic slowdown, consumer expenditure – a key engine of economic growth – under control in the midst of inflationary pressures and high interest rates.
In addition, market volatility has increased, as evidenced by the CBOe volatility index (VIX), often called “gauge of fear” of Wall Street, reaching its highest level as main drivers, it is worth critically examining whether these factors are the main provoks or if the main problems of techniques or shaking in the only cause market instability. The high dependence on a few technological actions of mega-captain to generate market gains in recent years could amplify slowdowns when investors’ confidence decreases.
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Donald Trump’s re -election in November 2024 and subsequent policy announcements, in particular with regard to prices, have been united to the markets. The proposals for general prices on imports, including up to 25% on the goods of Canada and Mexico, have raised fears of increasing costs for businesses, potential inflation and global trade disturbances. The uncertainty about public spending, tax policies and debt ceiling negotiations has added to the discomfort of investors, in particular given the budgetary tightening to slow down economic growth.
Economic data has shown signs of weakening, consumer expenditure – a critical engine of American GDP – under pressure due to persistent inflation and high borrowing costs. Retail sales and consumer confidence measures have been closely monitored, some indicators suggesting a slowdown. The position of the monetary policy of the Federal Reserve, balancing control of inflation and economic growth, added to uncertainty. Although the Fed reduced rates at the end of 2024 to stimulate growth, fears persist that it may need to maintain higher rates for longer to combat inflation, which could tip the economy in the recession.
The decline of the NASDAQ was exacerbated by a reassessment of the evaluations of technological actions, many of which were negotiated with historically high multiple. Investors have shot growth actions in more defensive sectors, such as public services and strokes of consumers, in the midst of fears of an economic slowdown. Specific events, such as disappointing benefits of large technological companies or a regulatory examination, have also contributed to the misfortunes of the sector.
The rally of technological actions in recent years, in particular in companies related to AI, may have created a bubble type scenario. Current sale could be a correction of unsustainable assessments rather than a single reaction to policy changes. For example, companies like Nvidia, which have experienced dazzling gains, have experienced strong decreases while investors are reassessing growth expectations. The S&P 500 and the Nasdaq have greatly depended a small group of technical mega-captain stocks (often called “Magnifice seven”) to generate gains.
