Stock futures ticked higher on Tuesday after a brutal sell-off on Monday, as fears of a looming recession rattled investors. The S&P 500 tumbled 2.7%, the Dow Jones Industrial Average shed 2.08%, and the Nasdaq Composite plunged 4% — its worst session since September 2022. The sharp declines came amid escalating concerns that ongoing tariff policy uncertainty could drag the U.S. economy into a downturn. While the White House downplayed the market slump, calling it less significant than broader business activity, investor anxiety remains high. President Donald Trump’s weekend comments, where he didn’t rule out the possibility of a recession, only added to the unease, prolonging the three-week market slide.

US Market Previous Day:

Stocks continued their steep slide on Monday as mounting recession fears weighed heavily on Wall Street. The tech-heavy Nasdaq Composite plunged 4%, marking its worst session since September 2022, while the S&P 500 dropped 2.7% to close at 5,614.56, and the Dow Jones Industrial Average fell 890.01 points, or 2.08%, to end at 41,911.71. The Dow also closed below its 200-day moving average for the first time since November 2023. The sell-off extended losses from three consecutive negative weeks for the S&P 500, leaving the index down 8.7% from its February 19 all-time high, while the Nasdaq is now nearly 14% off its recent peak — firmly in correction territory.

(Source: TradingView.com)

Tech stocks bore the brunt of the sell-off, with the “Magnificent Seven” losing over $750 billion in market value. Tesla plunged 15%, its worst day since 2020, while Alphabet and Meta each lost over 4%. Nvidia, a key player in the AI boom, slipped 5%, and Palantir tumbled 10%, reflecting investors’ shift away from high-growth tech toward safer, defensive names. Notably, stocks like Mondelez and Johnson & Johnson eked out small gains, buoyed by their steady revenue and dividend payouts.

The sharp market declines come as investors grow increasingly uneasy about the economic outlook. In a Fox News interview on Sunday, President Donald Trump acknowledged the likelihood of an economic “transition period,” while Treasury Secretary Scott Bessent warned of a potential “detox period” as the administration slashes federal spending. The uncertainty surrounding fiscal policy and ongoing tariff volatility has fueled investor anxiety, amplifying market volatility and driving the major indexes to their worst weekly performance in months.

US Futures Remain Flat:

• Dow Jones Industrial Average futures remained flat
• S&P 500 futures showed meagre gains of 0.05%
• Nasdaq Composite futures was up by 0.12%.

Key Economic Data/News:

Markets continued to tumble as investors grappled with escalating tariff uncertainty and growing fears of an economic slowdown. U.S. President Donald Trump dismissed business concerns over unpredictable trade policies, stating in a Sunday Fox News interview, “They have plenty of clarity.” While he declined to predict a recession, he acknowledged the potential for “disruption,” signaling that volatility may persist.

In the auto sector, Volkswagen and Stellantis confirmed a temporary one-month exemption from Trump’s 25% tariffs on Canadian and Mexican-made vehicles. BMW, however, will face full duties. Meanwhile, U.S. Energy Secretary Chris Wright hinted at a potential agreement with Canada to sidestep tariffs on oil, gas, and other energy imports — a move that could ease pressure on energy markets.

Earnings Season/Company News:

esla shares crashed 15% on Tuesday, marking their worst day since September 2020 and extending a brutal seven-week losing streak. The EV giant has now lost over 50% of its value since peaking in December, erasing more than $800 billion in market cap. The stock’s decline has accelerated since CEO Elon Musk became more involved with Trump’s administration, raising concerns over how political ties may influence the company’s long-term strategy.

Elsewhere, Delta Air Lines plummeted 14% after cutting its Q1 outlook, citing deteriorating consumer and corporate confidence amid rising macroeconomic uncertainty. The airline now expects revenue growth of just 3%–4%, down from its prior forecast of 7%–9%, and slashed its EPS estimate to $0.30–$0.50, well below the earlier range of $0.70–$1.

Global Market Trends:

Global markets remained under pressure on Tuesday as investors grappled with growing fears that the U.S. economy could tip into recession due to President Trump’s unpredictable tariff policies.

In Europe, the Stoxx 600 slipped 0.57%, dragged down by travel and leisure stocks. The FTSE 100 led the region’s losses, falling 0.38%, while France’s CAC 40 remained flat, and Germany’s DAX edged up by 0.3%. The mixed performance reflects uncertainty, with investors balancing corporate fundamentals against geopolitical risk.

Asia-Pacific markets mirrored U.S. losses:

• Japan’s Nikkei 225 closed down 0.64% at 36,793.11, weighed by steep losses in tech names like Konica Minolta (-6.98%) and Fujitsu (-4.98%). Japan’s Q4 GDP was revised down to 2.2%, missing forecasts.
• South Korea’s Kospi dropped 1.28%, while the Kosdaq slipped 0.60%.
• Taiwan’s Taiex fell 1.73%, clawing back from steeper losses earlier in the session.
• Hong Kong’s Hang Seng was flat, and China’s CSI 300 managed a modest 0.32% gain.

The combination of softer growth data in Japan, recession fears in the U.S., and unrelenting tariff uncertainty is fueling investor anxiety. Defensive sectors, like consumer staples, are seeing inflows as investors pivot to safer assets amid heightened volatility.

Debt Market:

(Source: TradingView.com)

U.S. Treasury yields were little changed on Tuesday as worries over the state of the U.S. economy persisted. The benchmark 10-year Treasury yield was at 4.221%. The 2-year Treasury yield was at 3.891%, after falling to its lowest level since October.

Commodities and Other Assets:

Gold prices advanced during European trading as the U.S. dollar hovered near a four-month low. Recession fears and anticipation of the upcoming CPI data (due Wednesday) have kept investors cautious. A cooler inflation print could reinforce expectations that the Federal Reserve will hold interest rates steady next week, giving gold more room to rise as a safe-haven asset.

Oil prices rebounded from earlier losses, lifted by a weaker dollar. However, gains were capped by ongoing concerns about demand, with fears that Trump’s shifting tariff policies — particularly the 20% levy on Chinese goods — could suppress global oil demand. Markets remain jittery after steep losses over the past three weeks, with traders watching for any signals from OPEC+ on potential production adjustments.

Bitcoin slipped below $80,000 on Monday, touching an intraday low of $77,396.43 — the lowest since November. The crypto market appears tied to risk-off sentiment in equities, with traders liquidating digital assets amid broader market turmoil. Despite the sell-off, investors remain optimistic about long-term growth, citing regulatory progress as a potential catalyst for future price surges.

Market Sentiment:

The market’s volatility is clearly being driven by the whiplash effect of Trump’s tariff policies and unpredictable White House messaging. But economists are signaling that consumer spending, a resilient labor market, and potential fiscal boosts (like tax cuts and deregulation) might act as buffers against an immediate recession.

The spike in the Cboe Volatility Index (VIX) shows investors are bracing for more turbulence. This is often a sign that portfolios are shifting toward safer assets, even if the economic data isn’t fully flashing red yet.