The U.S. stock market has lost $5 trillion in value over the past three weeks. This marks a rapid 10% decline from a record high into correction territory. According to FactSet, the market value of the S&P 500 at its February 19 peak was $52.06 trillion.
As of Thursday, the index’s market value had decreased to $46.78 trillion, resulting in a total loss of about $5.28 trillion. Geopolitical tensions and economic factors have influenced the decline.
Headlines about tariffs with several of the United States‘ major trading partners appear to have driven market movements, adding to market volatility. There have also been signs of slowing economic growth.
This is reflected in weak consumer sentiment surveys and cautious outlooks from businesses.
Stock market enters correction territory
“Our interactions with clients indicate that the mood music is changing. While many see recession talk as premature, concerns about erratic policy from the new administration abound. The ‘uncertainty tax’ is hitting growth expectations,” said Barclays strategist Emmanuel Cau in a note to clients. Another contributing factor to the decline is the unwinding of the growth trade related to artificial intelligence.
Since February 19, Nvidia’s stock has been down 17%, and the Roundhill Magnificent Seven ETF has fallen 16%. The pre-correction surge in AI-related stocks had previously raised concerns about overvaluation.
Several stocks had market caps above $3 trillion. According to FactSet, despite the recent downturn, the S&P 500 is still trading at 24.1 times its trailing 12-month earnings, well above its long-term average.
