The stock market faced intense selling pressure on Monday as recession concerns grew and Canada retaliated against President Donald Trump’s tariffs. The Dow Jones Industrial Average and other major indexes tumbled, with Palantir Technologies, Nvidia, and Tesla among the biggest losers.
Dow Jones and Nasdaq Take Heavy Losses
After a brief recovery on Friday, markets resumed their decline. The Dow plunged over 1,100 points at one stage before closing down 890 points, or 2.1%. Nvidia and Goldman Sachs were among the biggest laggards, both dropping more than 5%.
The Nasdaq composite suffered an even steeper decline, plummeting 4% (nearly 728 points). The tech-heavy index has now fallen over 10% year-to-date, breaking below its 200-day moving average.
Leaderboard stock DoorDash, despite news of its addition to the S&P 500, ended the day slightly lower. Meanwhile, Strategy (formerly MicroStrategy) crashed over 16% due to news of a potential $21 billion perpetual strike preferred stock issuance.
Tech Stocks Hit Hard Amid Mixed Sector Performance
The S&P 500 dropped 2.7% as selling intensified. Most sectors were in the red, with technology and consumer discretionary stocks hit the hardest. Energy and utilities were the only sectors to show gains.
Microchip Technology fell nearly 11%, while Carnival Corporation tumbled over 7%. Small caps were also affected, as the Russell 2000 index fell 2.4%.
Growth stocks took a hit as well. The Innovator IBD 50 ETF sank 3.4%, now down nearly 11% this year. Trading volume was higher than Friday’s levels on both the NYSE and Nasdaq.
Meanwhile, investors sought refuge in U.S. government bonds. The 10-year Treasury yield fell nine basis points to 4.23%.
Tesla Stock Sinks Amid Elon Musk Controversies
Tesla saw its losses accelerate, plunging over 15%. The stock fell below both its 50-day and 200-day moving averages. It has now erased all post-election gains and is down more than 45% in 2025. Musk’s political activities may be affecting Tesla’s European sales, as shares have lost over half their value since the Dec. 17 high of 488.54.
Adding to the turmoil, Musk clashed with Polish Foreign Minister Radoslaw Sikorski over Starlink access. He also reported a “massive cyberattack” on social media platform X, suggesting possible involvement from a coordinated group or nation-state.
Oracle Slumps Ahead of Earnings
Oracle, set to report earnings after market close, fell over 4%, losing key technical support levels. Analysts expect earnings to rise 11% to $1.49 per share, with revenue climbing 8% to $14.4 billion. Despite the sell-off, Oracle maintains a strong IBD Composite Rating of 88.
Tech Giants Face Broad Sell-Off
The “Magnificent Seven” tech stocks saw widespread losses. Tesla led the decline, but Apple also dipped below its 200-day moving average, signaling a sell-off. Nvidia, Meta, and Alphabet each dropped nearly 5%, with Alphabet slipping below its 200-day line.
Amazon and Microsoft fared better but still posted significant declines.
Robinhood Plunges After Regulatory Fine
Robinhood Markets faced heavy selling after the Financial Industry Regulatory Authority (FINRA) fined the company $26 million for rule violations, including anti-money laundering failures. The stock lost ground on its 50-day moving average and is nearing its 200-day support level.
Canada Responds to Tariffs as Trade Tensions Escalate
Canada’s next prime minister, former Bank of England Governor Mark Carney, criticized President Trump’s trade policies, vowing to impose retaliatory tariffs. Ontario Premier Doug Ford announced a 25% surcharge on electricity exports to the U.S., affecting 1.5 million customers in Minnesota, Michigan, and New York.
Market Fear Gauge Spikes, Inflation Concerns Rise
The Cboe Volatility Index (VIX) surged, reaching “extreme fear” levels, according to the CNN Business Fear & Greed Index. Meanwhile, a survey from the New York Federal Reserve indicated rising consumer concerns about inflation, with one-year inflation expectations climbing to 3.1%.
A Few Stocks Defy the Sell-Off
Despite the bearish sentiment, IBM briefly broke out above a flat-base entry of 265.72, with a strengthening relative strength line. Utility stock American Water Works also tested a buy point at 150.68, showing strong price momentum.
Trump’s Take on Recession Risks
President Trump added to market jitters by refusing to rule out a recession. He stated that the country is in a “period of transition” and emphasized long-term economic growth over short-term market fluctuations.
Additionally, Trump confirmed that tariffs on Chinese goods could increase further. New Chinese tariffs on U.S. agricultural products took effect Monday after the U.S. doubled tariffs on Chinese imports to 20% last week.
Palantir Stock Slides Further
Palantir Technologies continued its decline, underscoring the tough environment for growth stocks. Investors should remain cautious and focus on stocks demonstrating relative strength amid the ongoing market correction.
Looking Ahead
Investors should exercise caution in the current volatile market. While some stocks are holding up well, the broader trend remains bearish. Monitoring upcoming economic data and corporate earnings will be crucial in assessing future market direction.
