11.03.2025 10:40
The New York Stock Exchange finished the first trading day of the week with a sharp decline, as uncertainty caused by President Donald Trump's tariffs fueled fears of a recession. Analysts noted that the fear index among the American public has seen a significant increase regarding the future.
At the close, the Dow Jones index lost nearly 900 points, decreasing by 2.08% to 41,912.35 points. The S&P 500 index fell by 2.75% to 5,611.71 points, while the Nasdaq index dropped by 4% to 17,468.32 points, experiencing its worst day since 2022. The negative trend in the stock markets followed President Trump's statements over the weekend, which raised concerns about a recession in the U.S. economy.
TRUMP'S STATEMENTS DISTURBED THE MARKETS
U.S. President Trump, in an interview yesterday, did not rule out the possibility that tariffs on Canada and Mexico could lead to a recession in the country’s economy or an increase in inflation this year. In response to a question about whether a recession is expected this year due to tariffs, Trump said he "hates" making predictions on such matters. Trump stated, "There is currently a transition period because what we are doing is very big. We are bringing wealth back to America. This is a very important thing. There are always periods that take a little time." Regarding whether tariffs would fuel inflation, Trump emphasized that it could affect inflation, but interest rates have also fallen. As developments regarding Trump's tariff policy continue to influence market direction, the 25% customs duty on steel and aluminum imports is expected to come into effect on March 12.
INFLATIONARY PRESSURE IS INCREASING
On the other hand, Doug Ford, the Premier of Ontario, Canada’s most populous province, announced that in response to U.S. tariffs, they would impose an additional 25% charge on the electricity supplied to U.S. states. On the macroeconomic data front, signals from last week's employment figures supported risks regarding growth in the U.S. Analysts noted that concerns about tariffs increasing inflationary pressures in the country continue, stating that consumer inflation data to be released on Wednesday and producer inflation data on Thursday would be closely monitored by investors.
AMERICAN PUBLIC'S PESSIMISM IS INCREASING
Before the inflation data, the results of the Consumer Expectations Survey released by the New York Federal Reserve indicated that U.S. consumers' short-term inflation expectations have risen. Accordingly, the short-term median inflation expectation for the next 12 months increased from 3% to 3.1% last month. Thus, the short-term inflation expectation recorded an increase for the first time in four months. The median inflation expectations for the next 3 and 5 years remained unchanged at 3% during the same period. Additionally, the New York Fed reported that U.S. households are more pessimistic about their financial situations for the next year, with expectations for unemployment, default, and access to credit significantly worsening.
FEAR INDEX HAS INCREASED
With these developments, the VIX Index, also known as the "fear index," rose by over 19% to 27.8. The yield on the U.S. 10-year Treasury bond fell to 4.22%, while the dollar index increased by 0.10% to 103.9. On the corporate side, Tesla shares, which rapidly rose after Trump's election victory, continued to lose momentum due to the actions of CEO Elon Musk, who is responsible for the Department of Government Efficiency (DOGE), and his support for far-right political parties in Europe. Tesla's shares fell by 15.4% after UBS lowered its forecast for the company's vehicle deliveries in the first quarter.