US stocks suffer the worst single-day drop since 2025, with the Nasdaq facing high bear market risks.

On Monday, the US stock market experienced its worst single-day drop since 2025, with investors warning that the market may continue to fall in the future. The tech-heavy Nasdaq Composite Index may even enter a bear market. The Trump administration's failure to ease concerns about a US economic recession has further exacerbated market panic. The Nasdaq index suffered the most, dropping by 727.90 points, or 4%, to close at 17,468.32 points, reaching a new low since September 11, 2024. This drop is the largest single-day drop since September 13, 2022. Last week, the Nasdaq had already entered a technical correction area, falling more than 10% from its recent high. If the drop reaches 20%, the Nasdaq will officially enter a bear market. As of Monday's close, the index has fallen by 13.4% from its all-time high of 20,173.89 on December 16, 2024. Meanwhile, the Dow Jones Industrial Average dropped 890.01 points, or 2.08%, to close at 41,911.71 points. It dropped by as much as 1,189 points at one point. The S&P 500 Index fell by 155.64 points, or 2.7%, to close at 5,614.56 points, down 8.6% from its all-time high of 6,144.15 on February 19, 2025. Peter Cardillo, Chief Market Economist at Spartan Capital Securities, said on Monday, "This trend may continue." He pointed out that the Nasdaq has entered a correction range, and the S&P 500 is on the edge of a correction, which could lead to further selling in the market until the market sentiment is completely released. He added, "Is it too early to talk about a bear market now? Judging from the performance of the Nasdaq, the possibility of a bear market is quite high." Facing market panic, President Trump attempted to downplay the impact of tariff policies on businesses in an interview last Sunday. He did not rule out the possibility of an economic recession occurring this year, saying, "I'm not willing to predict such a situation." He stated, "We are going through a transition period because we are undergoing a very significant adjustment." Kevin Hassett, Director of the White House National Economic Council, tried to reassure market concerns about an economic recession in an interview on Monday. However, Cardillo of Spartan Capital said, "But the market itself is already sending signals." He added that the US bond market has been "flashing recession warnings" and that bond yields may continue to decline. Tom Essaye, founder of Sevens Report Research, pointed out in a report on Monday that the market's sharp decline is due to rising uncertainty, including concerns over tariff policies, upcoming debt ceiling negotiations, and the Trump administration's efforts to extend tax cuts implemented during its first term. He stated that investors fear that this uncertainty could lead to a slowdown in the economy as businesses and consumers adopt a wait-and-see attitude, impacting the profitability of the S&P 500. Essaye believes that if these concerns become reality, the S&P 500 could experience a correction of 10% or more. However, he also emphasized that the current market downturn is mainly due to panic sentiment, rather than genuine deterioration in economic data. Corporate profits remain strong, and analysts have not yet fully lowered profit expectations. The yield on the benchmark 10-year US Treasury bond has dropped from a high of 4.8% to 4.218%, indicating that market concerns about economic growth slowing down have surpassed concerns about inflation. Normally, bond yields move opposite to prices, and a decline in yields typically indicates that the market expects the Federal Reserve to take rate-cutting measures in the event of economic deterioration. Federal Reserve Chairman Powell stated last Friday that the US economic situation remains strong. However, as the trade war with major trading partners continues to escalate, market sentiment has significantly deteriorated, leading investors to question whether the Fed can continue its cautious rate-cutting pace. Gennadiy Goldberg, Head of US Rate Strategy at TD Securities USA, said, "In just a few weeks, the market has rapidly shifted from optimism to pessimism." Investors not only have to deal with uncertainty in Trump administration's tariff, immigration, and economic policies, but also need to watch out for the risk of a government shutdown on Friday due to Congress failing to reach an agreement. Goldberg stated, "The bond market is really concerned about the slowdown in growth, and the uncertainty of trade wars and fiscal policies has further exacerbated these concerns."