U.S. stock market erases $5.5 trillion investor wealth in just 17 trading sessions. More pain ahead?

Wall Street crash: The world’s largest stock market has been in a freefall in recent weeks as weak sentiments among investors persist amid growing concerns that Donald Trump’s trade wars with the country’s closest trading partners could pull down the economy, causing them to flee from risky bets at an accelerated pace.

The selling took another leg down last week after Trump threatened 200% tariffs on wine, champagne, and other alcoholic beverages from France and the European Union in response to the bloc’s 50% tariff on whiskey.

Further, investors were also worried after Trump stated that his policies could cause short-term pain and did not rule out a recession amid the implementation of U.S. tariffs, sending the S&P 500 in the red for four of the last five trading sessions and pushing it into correction territory.

The S&P 500, widely considered a benchmark for large-cap U.S. stocks, plunged 1.50% on Thursday, falling 10.20% from its February 19 all-time high to enter the correction zone, joining the Nasdaq Composite, which entered a correction earlier this month.

From February 19 to March 13, 2025 (17 trading sessions), the S&P 500 has shed $5.5 trillion in market capitalization—erasing six months of gains and retreating to September 2024 levels. Although the index rebounded strongly in Friday’s session, logging its best intraday jump of 2025 so far, it remains down 8.20% from its peak.

The sharp drop in the S&P 500 over a short span of time highlights growing investor uncertainty, as the index includes 500 leading companies across key U.S. industries, such as Apple Inc. and Nvidia Corp. These companies are publicly listed on the NYSE or NASDAQ and collectively represent 75% of U.S. equities.

The rally in U.S. stock market in recent years has been largely powered by tech stocks, including Nvidia Corp., Microsoft Corp., and Apple Inc., which surged on expectations of growth in artificial intelligence, sending valuations to sky-high levels.

However, they were put to the test after Chinese AI startup DeepSeek developed models that are more cost-effective than those made in the U.S.

White House vs. Wall Street

Despite investors expressing concerns about White House trade policies by selling off shares on the exchanges, officials remain unfazed by Wall Street volatility. Treasury Secretary Scott Bessent stated that he is not concerned about market fluctuations, as the Trump administration is focused on the long-term transformation of the U.S. economy.

He warned that the EU has more to lose in a trade war, as it relies more on exports to the United States. Speaking on NBC’s ‘Meet the Press,’ Bessent said he is “not worried” about the recent market downturn, which had wiped trillions of investor dollars from the equity market amid the Donald Trump-led government’s economic policies, Bloomberg reported.

On concerns about US economic policies, Bessent added, “We are putting the policies in place that will make the affordability crisis go down, inflation moderate, and as we set the sails, I am confident that the American people will come our way.”

Further during the interview, Bessent stated that the ‘American Dream’ is not contingent on being able to buy cheap goods from China. “Families instead want to afford a home and see their children do better than they are. It’s mortgages, it’s cars, it’s real wage gains,” he said.

Meanwhile, Trump says tariffs are needed to revitalize U.S. industries shrunken after decades of globalization, and he has stacked his administration with officials who agree with those views.

Dumping spree ahead?

According to the American Association of Individual Investors (AAII) Sentiment Survey, there is growing pessimism among individual investors regarding the short-term outlook for stocks, while both optimism and neutral sentiment experienced declines.

Bearish sentiment, reflecting expectations that stock prices will fall in the next six months, increased to 59.2%, marking an unusually high level above the historical average of 31%. This is the first time bearish sentiment has surpassed 57% for three consecutive weeks in the survey’s history, Investing reported.

Bullish sentiment, which indicates investor expectations for stock prices to rise over the next six months, saw a slight decrease of 0.2 percentage points, settling at 19.1%. This level of optimism is not only below the historical average of 37.5% but is also the first instance of bullish sentiment being under 20% for three straight weeks since September 22, 2022, when it was recorded at 17.7%.

Neutral sentiment, the belief that stock prices will remain relatively unchanged, also fell by 1.9 percentage points to 21.7%. This figure is below its historical average of 31.5% and has been considered unusually low for 34 out of the past 36 weeks.

The bull-bear spread, which is calculated by subtracting bearish sentiment from bullish sentiment, dropped 2.3 percentage points to –40.1%. This spread is significantly below its historical average of 6.5% and has been that way for the 10th time in the past 12 weeks, according to the report.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.