U.S. Stock Market Wipes Out $5.5 Trillion in Investor Wealth in 17 Sessions—Is More Turmoil Ahead?

The world's largest stock market has experienced a significant downturn in recent weeks, as investor confidence remains shaky due to mounting fears that Donald Trump's trade disputes with key trading allies could negatively impact the economy. These concerns have prompted a rapid exodus from high-risk investments.

Market losses deepened last week following Trump’s threat to impose 200% tariffs on wine, champagne, and other alcoholic imports from France and the European Union. This move was in retaliation for the EU’s 50% tariff on American whiskey.

Adding to investor anxiety, Trump acknowledged that his trade policies could bring short-term economic pain and did not dismiss the possibility of a recession due to the implementation of U.S. tariffs. This sentiment sent the S&P 500 into a losing streak, with four of the last five trading sessions ending in the red, ultimately pushing the index into correction territory.

The S&P 500—widely regarded as a benchmark for large-cap U.S. stocks—dropped 1.50% on Thursday, sliding 10.20% from its record high on February 19, officially entering correction territory. It joined the Nasdaq Composite, which had already fallen into correction earlier this month.

Between February 19 and March 13, 2025—a span of 17 trading sessions—the S&P 500 lost a staggering $5.5 trillion in market capitalization, wiping out six months’ worth of gains and retreating to levels last seen in September 2024. Despite staging a strong rebound on Friday, marking its best intraday surge of 2025, the index remains 8.20% below its peak.

The steep decline in the S&P 500 over a short period reflects growing uncertainty, as the index represents 500 of the most prominent U.S. companies across key industries, including Apple Inc. and Nvidia Corp. These firms, publicly listed on the NYSE and NASDAQ, collectively account for 75% of the U.S. equity market.

Tech Stocks Under Pressure Amid Global AI Competition

The recent rally in U.S. equities has been largely driven by tech giants such as Nvidia Corp., Microsoft Corp., and Apple Inc., which saw significant gains due to optimism surrounding artificial intelligence (AI). However, their lofty valuations have faced renewed scrutiny following advancements by Chinese AI startup DeepSeek, which has developed models that are reportedly more cost-effective than their U.S. counterparts.

White House Unmoved by Wall Street Volatility

Despite the market sell-off reflecting investor concerns over the administration’s trade policies, White House officials appear unperturbed by Wall Street fluctuations. Treasury Secretary Scott Bessent downplayed the turmoil, stating that the Trump administration is focused on long-term economic transformation rather than short-term market movements.

Bessent warned that the EU stands to suffer more in a trade war, as it is more dependent on exports to the United States. Speaking on NBC’s Meet the Press, he expressed confidence in the administration’s economic strategy, dismissing fears of prolonged market instability, Bloomberg reported.

Addressing concerns about economic policy, Bessent asserted, “We are laying the foundation for policies that will ease the affordability crisis, bring inflation under control, and set the course for long-term prosperity. I am confident the American people will see the benefits.”

During the interview, he also emphasized that the “American Dream” is not dependent on purchasing inexpensive goods from China. “Families care about affording a home, securing mortgages, buying cars, and achieving real wage growth,” he said.

Meanwhile, Trump continues to defend tariffs as a necessary measure to revitalize U.S. industries weakened by decades of globalization, surrounding himself with advisors who share his protectionist views.

Bearish Sentiment at Record Highs

Investor pessimism has surged, as reflected in the latest American Association of Individual Investors (AAII) Sentiment Survey. The survey indicates a sharp increase in bearish sentiment, with 59.2% of investors expecting stock prices to decline over the next six months—well above the historical average of 31%. Notably, this marks the first time in the survey’s history that bearish sentiment has remained above 57% for three consecutive weeks, Investing reported.

At the same time, bullish sentiment—indicating expectations of stock price increases—slipped by 0.2 percentage points to 19.1%, significantly below the historical average of 37.5%. This marks the first occurrence of bullish sentiment remaining under 20% for three consecutive weeks since September 22, 2022, when it stood at 17.7%.

Neutral sentiment, representing expectations that stock prices will remain stable, also declined by 1.9 percentage points to 21.7%, below the historical average of 31.5%. This figure has remained unusually low for 34 of the past 36 weeks.

Additionally, the bull-bear spread—calculated by subtracting the bearish sentiment from the bullish sentiment—fell by 2.3 percentage points to –40.1%. This level is considerably below the historical average of 6.5% and has remained in negative territory for 10 of the last 12 weeks, according to the report.