Tech Stocks Recover After Heavy Losses, But Recession Fears Linger
After a brutal Monday sell-off that erased over $1 trillion in market value, US stock futures showed signs of recovery on Tuesday, with investors cautiously stepping in to buy the dip.
Monday’s Market Mayhem
The sell-off was particularly severe in tech stocks, with the Nasdaq Composite plunging 4%, officially entering correction territory—down 10% from its December 16 peak of 20,173.89. The S&P 500 dropped 2.7%, while the Dow Jones Industrial Average fell 2.08%. The “Magnificent Seven” stocks collectively lost 5.4% on Monday, adding to broader market woes.
Tuesday Brings a Relief Rally
Pre-market trading on Tuesday signaled a potential rebound:
- Tesla (TSLA) surged 5% after crashing 15% on Monday.
- Nvidia (NVDA) recovered 1.5% after closing 5% lower.
- Other heavily sold-off tech names also attracted bargain hunters.
Recession Fears and Trump’s Trade Policy Uncertainty
The growing threat of a US recession remains a key concern. President Donald Trump sought to downplay fears, calling the economy’s current state “a period of transition.” However, his tariff policies have stoked inflation concerns, making it harder for the Federal Reserve to justify rate cuts.
With economic uncertainty rising, the 10-year Treasury yield dropped from a recent peak of 4.8% to 4.216%, signaling expectations that the Fed may eventually need to cut rates to support the economy.
Conclusion: A Market at a Crossroads
While Tuesday’s rebound offers a temporary relief, investors remain on edge over trade policies, interest rate direction, and the broader economic outlook. The Fed’s next moves will be crucial, with markets now hinging on upcoming economic data to gauge whether rate cuts could provide the much-needed boost for equities.
