It was the day Wall Street lost patience with President Donald Trump. Monday’s selloff was swift, messy, and impossible to recover, as investors recoiled from a tech slump, tariff-inspired fears, and fresh jitters over the economy.
A decisive nudge came on Sunday when Trump, in a meandering Fox News tv-interview, refused to rule out a recession, offering vague comments about «transition periods» and «bringing prosperity back» that did nothing to settle financial nerves.
The interview was conducted by Maria Bartiromo, Fox Business anchor and longtime Trump ally, who once earned the nickname “Money Honey” during her CNBC days. A Brooklyn native and daughter of a pizzamaker, Bartiromo has spent decades covering financial markets. But even she couldn’t frame Trump’s economic messaging in a way that kept investors from heading for the exits.
When European markets opened a day later, traders in Frankfurt, Paris, and London were staring at a breakfast special they never ordered: tumbling stocks, rising bond yields, and mounting uncertainty about what comes next.
‘The shift in sentiment is unmistakable’
The S&P 500 and Nasdaq Composite saw their biggest one-day losses in months on Monday, falling 2.7 and 4 percent, respectively. The hardest blows were in technology, with Tesla, Apple, Microsoft, and Nvidia collectively shedding tens of billions of dollars in market value.
Vincent Juvyns, global market strategist at JP Morgan Asset Management, said that investor sentiment has shifted dramatically. “The shift in sentiment is unmistakable,” he said.
«The focus of both Corporate America and consumers has changed: it’s no longer inflation that worries them most, but the strength of the economy itself,» Juvyns explained.
Yet, while sentiment is under pressure, Juvyns cautioned that it is still premature to sound the alarm. The fundamental economic backdrop has not changed dramatically in recent weeks, even if the market’s mood has.
Trump’s ‘transition’ comment fuels recession talk
Concern on the strength of the U.S. economy were largely triggered by Trump’s response when Bartiromo pressed him on whether the U.S. was heading into recession. Instead of denying it outright, he hedged:
«I don’t like to predict these things. There’s a transition period because what we’re doing is really big. We’re bringing prosperity back to America. That’s a big deal. And there are always periods of—it takes time. It takes time.»
Rather than reassuring investors, this ambiguity reinforced recession fears. His follow-up remark, «You can’t really watch the stock market,» only deepened the anxiety.
Trump ‘forcing the Fed to cut interest rates’
That comment made some Wall Street analysts question Trump’s commitment to a strong stock market, particularly as it aligned with his repeated calls for lower interest rates.
“The entire White House administration has its eyes on the ten-year yield,” said entrepreneur and bitcoin advocate Anthony Pompliano on X on Tuesday. «Fed Chair Jerome Powell was public in his defiance of Trump’s request (when the Fed left rates unchanged in January). Now Trump and Treasury Secretary Scott Bessent are taking matters into their own hands. They are crashing asset prices in an attempt to force Jerome Powell to cut interest rates.»
That ten-year yield stood at 4.26 percent on Tuesday, up 4 basis points from a day earlier and down from a high of 4.33 percent last week.
Market anxiety reflected in key indicators
The heightened anxiety in U.S. markets is also reflected in two key indicators: the CBOE Volatility Index (VIX) and CNN’s Fear & Greed Index. When U.S. markets opened on Tuesday, the VIX stood at 29, its highest level since October 2022.
Meanwhile, the Fear & Greed Index, which measures investor sentiment, registered 15, the lowest since May 2022.
Once again, global markets validated the old adage: When Wall Street sneezes, Europe catches a cold. By 17 CET, the Euro Stoxx 600 had fallen 1.3 percent while S&P 500 was down 0.4 percent, extending Monday’s loss of 2.7 percent.
Despite this week’s losses, the German DAX remains up 12 percent for the year. The European STOXX 600 index has gained 5.5 percent year-to-date, compared to a 4.6 percent loss for the S&P 500.
Valuation advantage for European markets
Yet, according to Juvyns, Europe may have one thing working in its favor: valuation.
«The risk discount on European equities is still significant. If some of the uncertainty around geopolitics and domestic policy improves, that discount could start to disappear,» he said, alluding to a potential ceasefire in Ukraine and the large-scale investment plan that German chancellor-candidate Friedrich Merz is proposing.
That means that, in theory, European stocks might fall less than their U.S. counterparts if sentiment across the Atlantic continues to weaken. Key sectors to watch in Europe, Juvyns says, include those that benefit from declining interest rates—particularly banks and real estate.
Sector rotation and investment outlook
Juvyns identifies three key takeaways. First, the S&P 500 was «priced to perfection.» At the end of last year, market valuations were stretched, with price-to-earnings ratios well above historical averages. With a pullback now underway, investors need to be more selective.
Secondly, sector rotation is already happening. Defensive sectors like healthcare, utilities, and consumer staples are starting to outperform. And despite the selloff, structural optimism remains in some areas. AI, technology, and defense continue to be strong long-term investment themes.
«The reality is that forecasting models are never perfect,» Juvyns admits. «But in times like these, investors need to be cold-blooded, step back, and reassess the situation rationally.»
Yet for all the turmoil, one thing is clear: Investors, once willing to ride out Trump’s unpredictability, are now voting with their portfolios.
