US stocks enter ‘correction’ territory while Tesla crashes

Another turbulent week on Wall Street saw one trillion dollars wiped off the value of the Nasdaq 100 on Monday (10 March), with the index registering its biggest one-day fall since October 2022, while the S&P 500 suffered its worst fortnight in two years with back-to-back weekly losses of more than 3%, entering ‘correction’ territory.

Markets seem to have suddenly woken up to recession fears after Donald Trump failed to dispel them by saying the economy was entering a ‘period of transition’ and the administration warned of short-term pain on the road to a new Golden Age.

The ‘Trump bump’ has turned into the Trump slump, with the S&P 500 index giving back all the gains it made since the election and the so-called Magnificent Seven entering bear market territory after dropping more than 20% since the end of 2024.

During times of turmoil investors would normally seek protection in US Treasury bonds, but this time around 10-year yields have remained stubbornly high despite consumer and producer prices coming in lower than expected this week.

Delta Air Lines

Atlanta-based Delta Air Lines was one of the worst-performing stocks of the past week, nose-diving by as much as 14% in a single day (10 March) after slashing its first-quarter profit estimate by more than half.

The airline now expects a profit in the range of $0.30 to $0.50 per share compared with a previous forecast of $0.70 to $1.00 provided in January.

Analysts at Bank of America said a cut to Delta’s earnings guidance had been anticipated, but the scale of it was deeper than the market was expecting and more carriers were likely to warn in the coming weeks as economic uncertainty ‘unfolds in real time’.

The airline said increasing economic worries among consumers and businesses had had a knock-on effect for domestic travel, with chief executive Ed Bastian telling media outlet CNBC: ‘We saw companies start to pull back. Corporate spending started to stall.’

Delta now expects its first-quarter revenue to grow 3% to 4% year-on-year, slower than the 7% to 9% increase in its previous forecast.

Retailers

US retailers are starting to show the effects of higher-for-longer interest rates and lingering inflation as shoppers change their habits to reflect their reduced spending power.

Dollar General chief executive Todd Vasos told analysts low-income shoppers, which make up a high proportion of its customers, are under so much financial strain ‘they have to sacrifice even on the necessities’.

Doug McMillon, chief executive of Walmart, the world’s largest retailer, said last week US shoppers were showing ‘signs of stress’ due to high food prices, with some running out of money before the end of the month and turning to smaller pack sizes to get by.

Analysts also highlighted a recent drop in US consumer confidence, with households growing more pessimistic about their financial prospects and a higher share of respondents expecting a rise in unemployment due to President Trump’s economic policies.

Elsewhere in the retail sector, American Eagle Outfitters warned 2025 revenue would miss expectations due to a slowdown in demand for clothing and accessories as shoppers face a squeeze on their budgets.

Department store chain Kohls and specialist retailer Dick’s Sporting Goods also warned sales would be below estimates this year due to weaker consumer spending.

Tesla

As of this week, electric vehicle maker Tesla has given up all the gains it had enjoyed in the wake of Donald Trump's election victory. Despite vocal support from the new president investors are concerned about slumping sales figures amid Elon Musk's divisive role in the new administration. The shares enduring their worst daily fall in nearly five years on 10 March.

Analysts at investment bank JP Morgan have lowered their forecast for first-quarter deliveries by 20% from 444,000 to 335,000, substantially below the consensus estimate of 430,000. This would represent an 8% decline year-on-year and would be the lowest level of deliveries for a three-month period since the third quarter of 2022.

Separately, Tesla has sent a missive to US trade representative Jamieson Greer warning White House trade policy could expose the business to retaliatory tariffs and said it should ensure that it did not 'inadvertently harm US companies'.