Dow plunges as market loses $5.28 trillion

The U.S. stock market has lost approximately $5.28 trillion in value over the past three weeks. On February 19, the market value of the S&P 500 peaked at $52.06 trillion, but by Thursday, it had dropped to $46.78 trillion. This rapid 10% decline from a record high has pushed the index into correction territory. Numerous factors have influenced the market’s downturn.

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— ET NOW (@ETNOWlive) March 27, 2025

Growing concern about erratic policies from the new administration has led to what Barclays strategist Emmanuel Cau refers to as an “uncertainty tax” on growth expectations. This sentiment is reflected in weak consumer sentiment surveys and tepid economic outlooks. Another significant factor contributing to the decline is the unwinding of the growth trade related to artificial intelligence (AI).

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Stocks in this sector had seen substantial gains prior to the correction, leading to concerns about overvaluation. Since February 19, Nvidia is down 17%, and the Roundhill Magnificent Seven ETF has fallen 16%. Our interactions with clients indicate that the mood music is changing,” Cau noted, suggesting that while many consider recession talk premature, concerns about policy uncertainty are significantly impacting market sentiment. This correction comes amid broader economic concerns.

The S&P 500 fell 1% yesterday, but more than half of it's components were higher on the day.

— Ryan Detrick, CMT (@RyanDetrick) March 27, 2025

Downturn impacts investor sentiment

Headlines about tariffs and trade disputes with several of the United States’ major trading partners have also played a role in market volatility. Despite these declines, the S&P 500 remains valued at 24.1 times its trailing 12-month earnings, which is well above its long-term average. These developments underscore the fragility of the current market and the significant impact of policy and economic signals on investor confidence Image Credits: Photo by Jamie Street on Unsplash