Trump policies scare Wall Street! Economic concerns intensify, and risk assets like US stocks are being "wiped out."

On Monday, as economic worries swept across Wall Street, investors pulled out from almost all types of risky assets, causing a further decline in the US stock market. US tech stocks experienced the largest drop since 2022, with the Nasdaq 100 index plummeting nearly 4%. Cryptocurrency prices fell. Corporate bond issuances were cancelled. Wall Street's fear index and key indicators of credit risk skyrocketed. US Treasury bonds rose, with yields dropping significantly, as they played the role of the last safe haven. Overall, concerns are growing that the US President Donald Trump's tariff increases, spending cuts, and political turmoil at GEO Group Inc will lead to an economic stagnation in the United States. Trump warns of "short-term pain," market sentiment reverses Trump and his allies began warning that in his quest to rebalance world trade, there may be some pain in the short term, heightening people's concerns. Investors are beginning to prepare for this. Alon Rosin, Head of Stock Derivatives at Oppenheimer, said, "Today's trading feels like an absolute death spiral." Stock market winners become biggest losers Market trends indicate a significant shift in market sentiment within less than two months of Trump's second term as President. Wall Street had initially welcomed Trump's presidency. The market was initially optimistic that Trump's tax cuts and deregulation plans would boost an already steady growing economy and drive the market forward. However, in recent weeks, prospects have been dimming as Trump has raised tariffs and cut federal spending. After the US stock market closed on Monday, Delta Air Lines, Inc. (DAL.US) lowered its profit forecast, citing increased uncertainty weakening consumer and business confidence. Amy Wu Silverman, Stock Derivatives Strategist at Royal Bank of Canada Capital Markets, said, "I think at some point there's going to be a bit of a panic. We're not there yet. But as anxiety intensifies, it will create situations where risks are alleviated and more uncertainty is introduced." Of course, Trump and his administration have begun signaling that there may be an adjustment period as he seeks to control the expanding federal deficit and challenge the global economic order. Trump's weekend remarks have sparked various speculations on Wall Street, with some saying he misjudged market sentiment, while others believe he supports selling stocks to lower interest rates. Michael Rosen, Chief Investment Officer at Angeles Investment Advisors, said, "Trump has spent weeks breaking the international economic order, presumably to fix and replace it with something better. Since it's unclear what that better thing is, investors can only contend with a fractured global economic framework. Unless we see something to replace it, investors will have to remain cautious." Safe-haven assets become popular choices Faced with this situation, traders are reverting to traditional strategies, flocking to defensive safe havens. The US two-year Treasury yield led the pack, causing its yield to drop by about 11 basis points. In the corporate bond market, as concerns about credit risk intensify, Wall Street bankers have cancelled around 10 transactions arranged for high-rated companies, indicating investors are pulling out of lower-rated bonds. Bitcoin dropped to a four-month low. Most of the stock selloff focused on large tech stocks that had made significant contributions to the bull market. The tech-heavy Nasdaq 100 index fell 3.8%, further entering a correction. Tesla, Inc. (TSLA.US), which was once seen as benefiting from a close relationship between CEO Elon Musk and Trump, saw its stock price drop over 15%. As concerns intensify, investors are turning to energy, consumer staples, and utility company stocks, as these industries are less susceptible to cuts in consumer spending and often perform well during economic slowdowns. Steve Sosnick, Chief Strategist at Interactive Brokers Group, Inc. Class A, said, "If you're a stock investor who is only long, you still have to put your money somewhere. These are often the go-to places for investors if they see storm clouds on the horizon. Shelter from the storm."