Stocks continued their slide this week, sending the Morningstar US Market Index into correction territory. Over the past few weeks, mounting anxiety surrounding tariffs, slowing economic growth, and the unwinding of the mega-cap growth trade have sent stocks sharply lower.
In Wall Street lingo, a correction happens when stocks fall more than 10% from their recent high. Losses above 20% constitute a bear market. The US Market Index hit its latest intraday high on Feb. 19. At Thursday’s close, it had fallen 10.45% from that record, having breached the 10.00% down mark during midday trading.
Technology stocks have been leading the decline, with losses well into correction territory. The Morningstar US Technology Index is down 15.2% from its intraday peak set on Dec. 26. The S&P 500, meanwhile, is down 10.2% from its intraday record high set Feb. 19.
Tariff Woes Weigh on US Stocks
Concerns about tariffs have been front and center for investors over the past few weeks as markets struggle to adjust to new taxes being implemented—or threatened—by the Trump administration as part of a dramatic overhaul of US trade policy. Those tariffs include additional taxes on China and substantial new taxes of 25% on goods imported from Canada and Mexico, some of which have been delayed until next month. Trump has also suggested he intends to impose substantial new tariffs on goods from Europe.
Analysts say the tariffs, if left in place, will weigh heavily on the US stock market and economy. “For US stocks, its businesses involved in the consumer and industrials sectors that will be most impacted, with the reality of the situation being that a substantial hike in the prices of many of these goods in Europe will simply force consumers there to purchase alternatives from within the Eurozone or elsewhere,“ explains Morningstar strategist Michael Field.
US Bull Market Gains Persist
The recent selloff comes after more than two years of powerful bull market gains, driven largely by mega-cap technology stocks and the artificial intelligence boom. Over the past 12 months, the US Market Index has returned 8.9% through the end of Wednesday’s trading. Since the beginning of 2023, stocks are up nearly 50%.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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