In the Markets Now: Selloff Summary

Markets dropped significantly as growth headwinds, tariff uncertainty, and Big Tech underperformance weighed on headline returns.

What Happened?

The S&P 500 fell -2.7% on Monday, March 10, its worst day of 2025. The index now finds itself down -8.6% from the all-time high set on February 19, 2025. Big Tech led to the downside (more below), with the Nasdaq 100 off -3.8%, its worst day since late 2022, and the S&P 500 Equal Weight “only” down -1.3% for the day.

Why Did It Happen? What’s Next?

Market weakness has been building amid several (somewhat) interconnected headwinds:

Tariffs. Tariffs are a tax paid by businesses on imported goods. While many U.S. firms are well into a decade-long quest to reroute supply chains and diversify manufacturing bases, most that are subject to tariffs will be forced to pass costs on to their end consumer via price hikes or see lower profit margins. Retaliatory action from other countries could create a global trade war with few winners.  

Uncertainty. Amid the ambiguity of the Trump administration’s official policy, companies are increasingly identifying tariff uncertainty as an obstacle to growth. U.S. firms could likely endure higher tariffs by themselves, but a lack of clarity and specifics weighs on the investment and hiring activity that drives long-term growth.

Economic slowdown. The U.S. avoided a recession in 2023 on the back of a robust labor market and strong consumer. But recent data have called these supportive conditions into question—particularly the U.S. consumer’s ability to maintain its impressive pace of spending. As a result of downside surprises to key data, the Atlanta Fed’s GDP estimate for Q1 economic growth is now negative. While the Federal Reserve does have room to cut interest rates to boost the economy, their concern over the inflationary impact of tariffs may limit their willingness to do so.

Transition. These headwinds were supercharged by President Trump’s comments over the weekend that the economy may undergo "a period of transition" in pursuit of broader goals. His refusal to rule out a recession—and his comment that “you can’t really watch the stock market”—surprised many investors who had imagined the administration would use the market and the economy as a scoreboard of success.

Tech wreck. Market-cap weighted indexes (e.g., the S&P 500) are historically concentrated in Big Tech companies, which have underperformed in 2025 amid concerns over A.I. spending, valuation, and the potential to get caught up in a global trade spat (e.g., chip export controls, European tech regulation, etc.).

Still, selloffs are far from uncommon and the opportunity to compound wealth in stocks is available partly because of risk and volatility. An investment that grows at 10%+ a year with zero downside risk can only reasonably be called one thing—a scam. As always, we remind you to stick to your plan and lean on your Baird Financial Advisor in times of strain. We’ll keep an eye on markets in the meantime.

Disclosures

This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. Market and economic statistics, unless otherwise cited, are from data provider FactSet.

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