US stocks enter correction as Tesla crashes, wiping $1 trillion off Nasdaq

Wall Street faces turbulence as major indexes plunge, with tech stocks and airlines hit by economic concerns.

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Wall Street faced another turbulent week as US stocks entered correction territory, with the Nasdaq 100 shedding $1 trillion in market value on Monday, marking its steepest one-day decline since October 2022.

The S&P 500 also suffered its worst fortnight in two years, posting back-to-back weekly losses exceeding 3%.

Investor sentiment soured amid growing recession fears, compounded by former President Donald Trump’s comments that the economy was in a "period of transition" and the administration’s warning of short-term economic pain before an anticipated recovery.

The so-called "Trump bump" has now turned into a slump, with the S&P 500 erasing all gains made since the 2024 election. The "Magnificent Seven" tech stocks have also entered bear market territory, plunging more than 20% since the start of the year.

Despite lower-than-expected consumer and producer price data, 10-year US Treasury yields remained stubbornly high, failing to provide a safe haven for investors.

Tesla crashes as sales slump, Musk’s influence questioned

Tesla (NASDAQ: TSLA) has now erased all post-election gains despite vocal support from Trump, as investors grow wary of declining sales and CEO Elon Musk’s controversial role in the administration.

Shares plunged to their lowest level in nearly five years on Monday, with JP Morgan slashing its first-quarter delivery forecast by 20% to 335,000 units, well below the consensus estimate of 430,000. If realized, this would mark an 8% year-on-year decline and Tesla’s weakest quarterly delivery figure since Q3 2022.

The company has also raised concerns about US trade policy. In a letter to US Trade Representative Jamieson Greer, Tesla warned that the White House’s stance could expose American businesses to retaliatory tariffs and urged policymakers to ensure US companies are not inadvertently harmed.

Delta Air Lines plunges on profit warning

Delta Air Lines (NYSE: DAL) was among the hardest-hit stocks, tumbling 14% on Monday after slashing its first-quarter profit forecast by more than half. The airline now expects earnings of $0.30 to $0.50 per share, down from its earlier projection of $0.70 to $1.00.

Bank of America analysts said the downgrade was anticipated, but its severity took the market by surprise. They warned that more airlines could follow suit as economic uncertainty unfolds.

Delta CEO Ed Bastian told CNBC that corporate travel demand had weakened due to economic concerns, with businesses cutting back on spending. The airline now expects first-quarter revenue growth of 3% to 4% year-on-year, down from a previous forecast of 7% to 9%.

Retailers feel consumer strain

US retailers are also showing signs of strain as higher interest rates and lingering inflation weigh on consumer spending.

Dollar General CEO Todd Vasos said many low-income shoppers, who make up a significant portion of the chain’s customer base, are struggling to afford even basic necessities.

Walmart CEO Doug McMillon echoed these concerns, noting that some US shoppers were running out of money before the end of the month and opting for smaller pack sizes due to high food prices.

Consumer confidence has weakened, with a growing number of households pessimistic about their financial prospects. Analysts warn that rising unemployment concerns tied to President Trump’s economic policies could further dampen spending.

American Eagle Outfitters also issued a warning, saying 2025 revenue would likely miss expectations due to slowing demand for clothing and accessories. Department store chain Kohl’s and sporting goods retailer Dick’s Sporting Goods similarly forecast weaker sales for the year.

Market

With stocks under pressure, analysts warn that economic uncertainty, shifting trade policies, and weak consumer sentiment could prolong market volatility. Investors will be closely watching upcoming economic data and corporate earnings for further signals on the trajectory of the US economy.