Stock sell-off worsens as Wall Street wonders how much pain Trump will accept for the economy

NEW YORK — The U.S. stock market’s sell-off is worsening Monday as Wall Street questions how much pain President Trump is willing for the economy to endure in order to get what he wants.

The Standard & Poor’s 500 index fell 155.64 points, or 2.7%, to 5,614.56 to drag it close to 9% below its all-time high, which was set just last month. At one point, the S&P 500 was down 3.6% and on track for its worst day since 2022. That’s when the highest inflation in generations was shredding budgets and raising worries about a possible recession that ultimately never came.

The Dow Jones industrial average dropped 890.01 points, or 2.1%, to 41,911.71, after paring an earlier loss of more than 1,100, while the Nasdaq composite sank 727.90 points, or 4%, to 17,468.32.

It was the worst day yet in a scary stretch during which the S&P 500 has swung more than 1%, up or down, seven times in eight days because of Trump’s on- and off-again tariffs. The worry is that the whipsaw moves will either hurt the economy directly or create enough uncertainty to drive U.S. companies and consumers into an economy-freezing paralysis.

The economy has given some signals of weakening, mostly through surveys showing increased pessimism. And a widely followed collection of real-time indicators compiled by the Federal Reserve Bank of Atlanta suggests that the U.S. economy may already be shrinking.

Asked over the weekend whether he was expecting a recession in 2025, Trump told Fox News Channel: “I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing.” He added, “It takes a little time. It takes a little time.”

Trump says he wants to bring manufacturing jobs back to the United States, among other reasons he’s given for tariffs. His Treasury secretary, Scott Bessent, also has said the economy may go through a “detox” period as it weans itself off an addiction to spending by the government.

The U.S. job market is still showing stable hiring at the moment and the economy ended last year running at a solid rate. But economists are marking down their forecasts for how the economy will perform this year.

At Goldman Sachs, for example, David Mericle cut his estimate for U.S. economic growth for the end of 2025 to 1.7% from 2.2% for the previous year, largely because tariffs look like they’ll be bigger than he was previously forecasting.

He sees a 1 in 5 chance of a recession over the next year, raising it only slightly because “the White House has the option to pull back policy changes” if the risks to the economy “begin to look more serious.”

“There are always multiple forces at work in the market, but right now, almost all of them are taking a back seat to tariffs,” said Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley.

The worries hitting Wall Street have been hurting some of its biggest stars the most. Big Tech stocks and companies that rode the artificial intelligence frenzy in recent years have slumped sharply.

Nvidia fell 4.9% on Monday to bring its loss for the year to 20.2%. It’s a steep drop-off from its nearly 820% surge over 2023 and 2024.

Elon Musk’s Tesla fell 8.7% to deepen its loss for 2025 to more than 40%. After getting an initial post-election bump on hopes that Musk’s close relationship with Trump would help the electric-vehicle company, the stock has since slumped on worries that its brand has become intertwined with Musk. Protests against the U.S. government’s efforts to cull its workforce and other moves have targeted Tesla dealerships, for example.

Stocks of companies that depend on U.S. households feeling good enough about their finances to spend also tumbled sharply. United Airlines lost 8.3% and cruise ship operator Carnival fell 8.2%.

It’s not just stocks struggling. Investors are sending prices lower for all kinds of investments whose momentum had previously seemed nearly impossible to stop at times, such as bitcoin. The cryptocurrency’s value has dropped back toward $80,000 from more than $106,000 in December.

Instead, investors have been herding into U.S. Treasury bonds as they look for things whose prices can hold up better when the economy is under pressure. That has sent prices for Treasurys sharply higher, which in turn has pulled their yields lower.

The yield on the 10-year Treasury tumbled again to 4.21% from 4.32% late Friday. It’s been dropping since January, when it was approaching 4.80% as worries about the economy have grown. That’s a major move for the bond market.

All the uncertainty, though, hasn’t shut down dealmaking on Wall Street. Redfin’s stock jumped 68.1% after Rocket said it would buy the digital real estate brokerage in an all-stock deal, valuing it at $1.75 billion. Rocket’s stock sank 14.9%.

ServiceNow fell 6.3% after the AI platform company said it was buying AI-assistant maker Moveworks for $2.85 billion in cash and stock.

In stock markets abroad, European indexes largely fell after a mixed session in Asia.

Indexes fell 1.8% in Hong Kong and 0.2% in Shanghai after China said consumer prices fell in February for the first time in 13 months. It’s the latest signal of weakness for the world’s second-largest economy, as persistent weak demand was compounded by the early timing of the Lunar New Year holiday.

Choe writes for the Associated Press.