Daily Summary: Wall Street Stumbles as Trump's Tariffs Spark Recession Fears

US indices plunged on Monday with the S&P 500 down 2.3%, Nasdaq 100 falling 3.4%, and the Dow Jones Industrial Average dropping 1.2%, as investors fled equities amid growing fears of a recession triggered by trade tariff uncertainty.

President Trump acknowledged a "period of transition" when asked about recession concerns in a Fox News interview, signaling he may accept short-term market pain for his broader trade policy goals, which wiped out all post-election gains for major indices.

Several Wall Street firms slashed economic forecasts, with Goldman Sachs cutting its 2025 GDP outlook to 1.7% from 2.4% and Morgan Stanley reducing projections to 1.5% from 1.9%, citing "considerably more adverse" trade policy assumptions.

Stagflation concerns emerged as economists predict slower growth combined with persistent inflation, with Goldman now expecting the Fed's preferred inflation gauge to end the year at 3%, up from previous mid-2% range forecasts.

Tech stocks led market declines with the "Magnificent Seven" megacaps tumbling 5.3% collectively, as Tesla plunged more than 12% to its lowest level since before the election after UBS lowered its price target citing softening demand.

Bitcoin fell below $80,000, now down 27% from its post-inauguration high despite Trump's pro-crypto stance, with investors disappointed that the announced strategic bitcoin reserve will only include cryptocurrency already held by the government.

The VIX volatility index hit its highest level this year as market sentiment shifted dramatically, with a majority of individual investors now expecting stock prices to drop over the next six months according to an AAII survey.

Treasury yields declined with the 10-year falling seven basis points to 4.23% on expectations that economic slowdown would force the Federal Reserve to cut interest rates more aggressively.

WTI crude oil continued its slide to three-year lows, falling 1% to $66.40 per barrel as Trump's tariff policies, OPEC+ production increases, and potential peace talks in Ukraine pressured energy markets.

Mohamed El-Erian elevated his recession forecast to 25-30% probability, up from 10% previously, while betting markets now place 40% odds on a recession being officially called by year-end.