U.S. stock market plummets as S&P 500 loses $5 trillion in three weeks

In the United States, the stock market has experienced a significant downturn, with the S&P 500 index falling over 10% from its record high as of March 14, 2025. This decline, which commenced approximately three weeks ago, has led to a staggering loss of about $5.28 trillion in the market's overall value. The peak market value of the S&P 500 on February 19, 2025, was recorded at $52.06 trillion, which dropped to $46.78 trillion following the recent declines, marking a turbulent period for investors and contributing to widespread concern about the economic outlook. Several factors have contributed to this downward trend. Foremost among them is the ongoing trade war initiated by President Donald Trump with various major trading partners of the United States. This situation has led to a series of tariffs and economic uncertainties, creating a challenging environment for market stability. Additionally, reports of slowing economic growth, evidenced by weak consumer sentiment surveys and disappointing forecasts from major retailers such as Walmart, have raised alarms regarding the overall health of the economy, further fueling investor fears. Moreover, there has been a noticeable retreat from the growth stocks that thrived during the artificial intelligence boom, with companies like Nvidia experiencing a substantial drop in share value, down 17%, and the Roundhill Magnificent Seven ETF decreasing by 16%. The prior ascent of these AI-related stocks had raised questions about the sustainability of valuations within the stock market, as some companies had at times boasted market capitalizations exceeding $3 trillion. This excessive valuation has intensified scrutiny from investors, contributing to the perception of a market bubble that could be at risk of bursting. Despite the significant losses, some analysts argue that discussions around a potential recession are premature. However, the so-called 'uncertainty tax' arising from unpredictable policies from the new administration has substantially influenced growth expectations and investor sentiment. The S&P 500's current trading ratio being well above its long-term average indicates the market has not fully adjusted to the realities of the economic climate, creating an environment ripe for volatility and uncertainty in the near future.