The US stock market fell, but why? 2025’s worst day

Experts assert that the continuous shifts in US trade policy continue to contribute to economic uncertainty and market volatility.

Stocks plummeted on Friday after lower-than-expected growth data indicated that President Donald Trump’s policies would have a detrimental effect on US company activity. Both the S&P 500 and the Dow Jones Industrial Average fell 1.7%, their largest one-day declines since December 18, 2023. Meanwhile, the Nasdaq composite dropped 2.2%.

Business activity is getting close to stall speed.
According to an S&P Global study, corporate activity in the US has drastically dropped, with growth slowing to a 17-month low. Specifically, the services sector had an unanticipated decrease. Increasing skepticism about Trump’s intentions, such as possible new tariffs and domestic expenditure cuts, was seen by many firms polled as a major depressant.

According to Chris Williamson, chief business economist at S&P Global Market Intelligence, “businesses express broad concerns about the impact of federal government policies, ranging from spending cuts to tariffs and geopolitical developments.” “Uncertainty is reportedly hurting sales, and prices are going up due to supplier price increases brought on by tariffs.”

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According to a University of Michigan study, consumers were bracing for price increases due to possible tariffs, which increased market pressure from concerns about inflation. Large retailers like Walmart often increase prices by passing these costs on to customers because importers are subject to tariffs.

The recent drop in business activity reported by S&P Global is proof that businesses and consumers are growing increasingly apprehensive about the administration’s intentions.Despite initial excitement after Trump’s win, worries about trade, expenditure cuts, and regulatory uncertainty have eclipsed promises of a business-friendly atmosphere.
Reports of lower-than-expected home sales and consumer confidence figures further soured economic outlooks.

Trump’s policy decisions create ambiguity.
Recently, the Trump administration postponed a 25% tax on imports from Mexico and Canada until March and placed a 10% duty on imports from China. Steel and aluminum tariffs have also gone up to 25%. Trump also hinted at imposing a 25% tax on imports of cars, semiconductors, and medications.

Meanwhile, federal government spending cuts, particularly in the scientific and environmental sectors, have resulted in the loss of thousands of jobs due to budget cuts from the recently formed Department of Government Efficiency (DOGE), which is led by billionaire Elon Musk.Reduced interest rates may boost the economy, but they may also increase inflation by promoting spending. Treasury yields fell after Friday’s softer-than-expected GDP data. As a result of the 10-year Treasury yield dropping from 4.51% to 4.41%, the bond market experienced a sharp decrease.

According to experts, these ongoing policy changes are still causing economic uncertainty and market volatility.