The U.S. stock market took a sharp dive Tuesday following President Donald Trump’s changes to economic policy and tariff announcements. Despite the significant drop, student investors seem unfazed.
“It’s more of a volatility shift and also investors’ psychological factors, especially from retail investors who are scared and panicked, but I don’t think this will continue, at least in the long run,” said Cindy Yang, co-president of USC’s Global Investment Society. “There are opportunities for the stock to rebound.”
According to CNBC, the Dow Jones Industrial dropped by 478.23 points or 1.14% while the S&P 500 lost upward of 0.76%.
Trump made a statement on Truth Social about increasing tariffs on Canadian steel and aluminum, which were set to go into effect Wednesday. This is just one of many Trump policies that have unsettled investors, with some fearing another recession. Trump has reasoned that steep tariffs will bring manufacturing jobs back to the United States, according to the Washington Post.
Tomas Levani, a freshman studying economics and statistics at Duke University, said if these tariffs remain in place for an extended time, they will do more harm than good to the market. He also said that although more jobs will be created, high labor costs in the U.S. will lead to higher consumer prices.
Over the weekend, Treasury Secretary Scott Bessent said in an interview with CNBC that there could be a “detox period” after the administration cut back on government spending. After the interview, Trump said the economy would go through “a period of transition” causing uncertainty.
“We’re going to have disruption, but we’re OK with that,” Trump said.
Paris Gapp, a junior majoring in business administration and finance, said she is not happy about the market’s downward trend, but acknowledges it as a common pattern.
“Although it is unfortunate for certain stocks and the overall index, I think that the market will eventually bounce back,” Gapp said.
According to Polymarket betting odds data, the chance of a US recession this year rose to 32% on March 6. The chance was only 23% in late February.
“There are always multiple forces at work in the market, but right now, almost all of them are taking a back seat to tariffs,” Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley, told the Associated Press.
Yang said there are many technical and psychological reasons the market may shift, and she is not worried yet.
“I don’t think the economy is bad, so there are opportunities for the stock to rebound. And the businesses are very good so I think it is doing well,” said Yang.