Wall Street hit the panic button Monday as traders wrestled with the twin storms of new tariff uncertainty and AI-fueled jitters. The Dow cratered more than 800 points, while software stocks were pummeled across the board after a Salesforce downgrade and a viral report warning that the AI boom could trigger a white-collar recession — and, potentially, a full-blown market crash.
President Donald Trump didn’t help matters. Over the weekend, he announced a global tariff hike to 15%, just a day after the Supreme Court of the United States struck down most of his earlier tariffs. Investors reacted swiftly, selling off equities in a rush to reduce exposure.
By midday Monday, the Dow Jones Industrial Average closed at 48,798.82, down 1.67% (-827 points). S&P 500: 6,828.49, down 1.18%. Nasdaq Composite: 22,584.70, down 1.32%
“Tariff uncertainty reigned this morning, pushing stocks to early losses and raising volatility on Wall Street,” said Joe Mazzola, head trading and derivatives strategist at Charles Schwab.
Software stocks took a brutal beating. The iShares Expanded Tech-Software Sector ETF, already in bear territory earlier this year, plunged another 5%, bringing 2026 losses to nearly 30%. Heavy hitters like AppLovin, Asana, DocuSign, and Zscaler all dropped 9%, with Oracle, Palantir, and Salesforce falling 6% each.
Adding fuel to the fire, a report from Citrini Research circulated on Monday painting a hypothetical 2028 scenario in which the AI boom sets off a recession and a market meltdown.
“The system turned out to be one long daisy chain of correlated bets on white-collar productivity growth,” the report warned. “The November 2027 crash only served to accelerate all of the negative feedback loops already in place.”
Investors are now hyper-focused on AI-driven capital expenditures, particularly ahead of Nvidia’s earnings report on Wednesday. Peter Berezin, chief market strategist at BCA Research, said the market’s anxiety is largely about spending on AI infrastructure without clear monetization:
“It’s a question of whether investors are going to revolt against all the massive spending on AI data centers that we’re having now.”
Mark Hackett of Nationwide attributed much of Monday’s volatility to “continued skepticism” over AI and fresh tariff uncertainty. Hedge funds, he noted, have aggressively moved to the sidelines, executing the fastest net sales of U.S. equities since March, marking one of the steepest monthly declines in a decade.
Investors will be watching closely this week as tech giants report earnings, with Nvidia and Salesforce results due Wednesday. The combination of trade uncertainty and AI anxiety has Wall Street bracing for another rough week.
