US shares drop sharply after Trump refuses to rule out recession

US shares fell sharply again on Monday amid uncertainty in the American economy, with President Donald Trump refusing to rule out a recession.

Tesla shares plunged by at least 15% to $222 - meaning it has lost more than half its value since its peak at $479.86 on 17 December. But Elon Musk said on X that "it will be fine long-term".

The tech-heavy Nasdaq Composite closed down more than 4% on Monday while the S&P 500 slumped about 2.7% - its biggest daily percentage drop since 18 December.

The CBOE Volatility Index, often dubbed Wall Street's "fear gauge", surged over 3.6 points to hit 27, marking its highest level since 18 December.

Airlines and other companies that need US shoppers feeling confident enough to spend also saw sharp losses. Bitcoin fell below $79,000 from more than $100,000 in December, with richly valued US tech stocks bearing the brunt of the recent sell-off on Wall Street.

Financial markets have been volatile in recent weeks as rising trade tensions - with tariffs of up to 25% against goods from Canada and Mexico - and signs of slowing US economic growth weighed on consumer confidence and business activity.

China has also been targeted with tariffs and the European Union could be next, from 2 April, when Mr Trump has promised to ramp up his "America first" ambitions.

China's retaliatory tariffs on select US imports are set to take effect on Monday, with US tariffs on certain base metals anticipated later in the week.

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Asked directly in a Fox News interview on Sunday whether he was expecting a recession, Mr Trump did not deny the possibility.

He said: "I hate to predict things like that. There is a period of transition because what we're doing is very big, we're bringing wealth back to America. That's a big thing. And there are always periods of - it takes a little time. It takes a little time."

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In an interview on Monday, Kevin Hassett, who heads the US National Economic Council, said there were many reasons to be optimistic about the US economy, despite some predictions of a contraction in GDP in the first quarter and concerns about inflation.

"There are a lot of reasons to be extremely bullish about the economy going forward. But for sure, this quarter, there are some blips in the data," Mr Hassett said, saying those stemmed from both timing effects of Mr Trump's rapid-fire tariffs push and some of what he called the "Biden inheritance".

The president and his team have repeatedly bashed the economy that they inherited from Joe Biden.

But when Mr Trump took office in January, GDP growth had largely exceeded trend for two years, consumer spending was strong and unemployment was still near historic lows.

(c) Sky News 2025: US shares drop sharply after Trump refuses to rule out recession