Nasdaq Worst Day of 2025: Bear Market Ahead?
Dow Drops Nearly 900 Points as S&P 500 Nears Correction
U.S. stock markets endured their worst session of 2025 on Monday, as investor fears of a potential recession intensified. The Trump administration’s attempts to reassure markets fell flat, raising the prospect of further selloffs and a possible bear market for the Nasdaq Composite Index.
The Nasdaq Composite suffered the steepest losses, plunging 727.90 points, or 4%, to close at 17,468.32—its lowest level since September 11, 2024. This marked its biggest percentage drop since September 13, 2022. Having already entered correction territory last week with a 10% decline from its peak, the index is now down 13.4% from its record close of 20,173.89 on December 16.
The Dow Jones Industrial Average tumbled 890.01 points, or 2.1%, to settle at 41,911.71, after dipping as much as 1,189 points intraday. The S&P 500 also saw a sharp decline, falling 155.64 points, or 2.7%, to close at 5,614.56, putting it 8.6% below its record close of 6,144.15 from February 19.
Market analysts anticipate further downside. “This selloff may not be over,” warned Peter Cardillo, chief market economist at Spartan Capital Securities. He pointed out that with the Nasdaq in correction mode and the S&P 500 teetering on the edge, continued selling pressure is likely. “Is a bear market next? The risk for the Nasdaq is growing,” he added.
President Donald Trump attempted to calm markets over the weekend, downplaying the effects of his administration’s tariff policies in a Fox News interview. However, he acknowledged that a recession in 2025 was a possibility. White House economic adviser Kevin Hassett sought to reassure investors in a CNBC interview on Monday, but market reaction suggested that confidence remained shaky.
“The market is sending a strong message,” Cardillo stated, highlighting that bond markets were signaling recession fears. Treasury yields, which move inversely to bond prices, continued to decline, reflecting expectations that the Federal Reserve may need to cut interest rates to stabilize the economy.
Tom Essaye, founder of Sevens Report Research, attributed the selloff to mounting uncertainty over tariffs, the looming debt ceiling fight, and discussions on extending Trump-era tax cuts. He warned that hesitation from businesses and consumers amid this uncertainty could slow economic growth and weaken corporate earnings.
While fear is driving market sentiment, Essaye emphasized that “the data itself hasn’t turned negative yet.” Corporate earnings remain solid, and analysts have not yet made sweeping downward revisions to estimates. However, with the S&P 500 still trading at over 21 times expected earnings, the index remains vulnerable to further declines.
The 10-year Treasury yield, now at 4.212%, has dropped from its recent 4.8% peak as inflation concerns give way to economic slowdown fears. Although Fed Chair Jerome Powell recently described the economy as “in good shape,” escalating trade tensions have darkened the outlook. This has fueled speculation that the Federal Reserve may reconsider its cautious stance on rate cuts in 2025.
“The market has shifted from optimism to anxiety in a matter of weeks,” noted Gennadiy Goldberg, head of U.S. rates strategy at TD Securities USA.
Investors now face a range of uncertainties—not only regarding Trump’s trade policies and economic approach but also the threat of a government shutdown if Congress fails to pass a budget deal by Friday.
“The bond market’s main concern is slowing economic growth, compounded by trade and fiscal uncertainty,” Goldberg told MarketWatch.
As volatility grips Wall Street, all eyes are on upcoming economic data and Federal Reserve decisions, as investors brace for what could be an extended period of market turbulence.
