The USA stock market experienced a tumultuous start to the week, with significant declines across major indices. As of midday on Monday, March 10, 2025, the S&P 500 had dropped 133 points, or 2.32%. This decline follows a rough week on Wall Street, where the S&P 500 posted its worst weekly performance since September 2024. The market's volatility is largely attributed to concerns over the US growth outlook, political uncertainty, and rising economic uncertainty. The DOW was down 1.36% losing 603 points and the NASDAQ lost 701 points falling 3.88%.

The main drivers of this market downturn include President Trump's tariff policies and the Federal Reserve's cautious stance on interest rates. In a recent Fox News interview, President Trump declined to rule out a recession, describing the current economic phase as a "period of transition." This uncertainty has led to a sell-off in US government debt, pushing 2- through 30-year yields higher. Federal Reserve Chair Jerome Powell acknowledged rising economic uncertainty last week, signaling that the central bank can wait for clarity on the economic outlook before making any significant moves.

The technology sector, which has been a significant driver of market performance, is currently trading at a forward price-to-earnings (P/E) ratio of 32x for FY25, significantly above its 5- and 10-year averages of 25x and 21x, respectively. This elevated valuation, coupled with a 25% year-to-date increase, suggests that the sector may be overextended. Megacap stocks such as apple, microsoft, nvidia, amazon, meta, and Alphabet have all traded lower with Tesla tumbling around 13% after data showed a 49% plunge in China shipments in February.

The return of Donald Trump to the U.S. presidency introduces new variables into the market equation. His policies on trade, tariffs, and deregulation are expected to create market volatility. While certain sectors like banking and energy may benefit from deregulation, the potential for increased tariffs could negatively impact international trade and corporate earnings.