Wall Street is in turmoil, with the S&P 500 losing a staggering $4 trillion in market capitalization on Monday, equivalent to wiping out the entire worth of all companies listed on India’s Bombay Stock Exchange (BSE). This dramatic decline, driven by rising trade tensions, inflation fears, and uncertainty around former President Donald Trump’s policies, has left investors on edge. Since its February peak, the S&P 500 has dropped 8.6%, while the Nasdaq Composite plunged 4% in a single day, marking its worst performance since September 2022.
To put
things in perspective, the total market value of all BSE-listed companies is
around $4.5 trillion. Meanwhile, the U.S. stock market, home to some of the
world’s biggest companies, is valued at approximately $57 trillion. The sheer
scale of these losses highlights growing investor anxiety over economic risks
and policy unpredictability.
Tech
giants were hit hard during Monday’s sell-off. Apple and Nvidia each lost about
5%, while Tesla plummeted 15%, erasing $125 billion in market value. The
S&P 500’s tech sector fell 4.3%, signalling a shift away from growth
stocks.
The
recent market crash has wiped out all the gains made since Trump’s re-election
on November 5. Investors are now re-evaluating the risks of his aggressive
trade policies, including tariffs. UBS has raised the probability of a U.S.
stagflation or economic downturn to 30%, up from 20%.
Indian Market – A Silver Lining
While
Wall Street’s turmoil has sent shockwaves globally, Indian markets have shown
relative resilience. The Nifty 50 has dropped 16% from its September peak, but
over the past month, it’s down only 2.7% compared to the S&P 500’s 7.5%
decline.
However,
valuation concerns remain. While the Nifty 50 is trading 9% below its
historical average, mid-cap and small-cap stocks are still overvalued by
22-25%, suggesting further corrections may be on the horizon.
What Next for the Markets?
Analysts are divided on whether this is the start of a deeper downturn or just a temporary correction. UBS remains cautiously optimistic, noting that equities still have medium-term potential but warning of elevated political risks in the coming months.
Concerns
over a U.S. government shutdown, further tariff hikes, and slowing economic
growth are mounting. The Cboe Volatility Index (VIX), a measure of market fear,
has surged to its highest level since August.
For now,
global markets remain on edge as Trump’s policies continue to reshape the
economic landscape, leaving investors bracing for more turbulence ahead.
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