U.S. stocks suffered their worst day of 2025 on Monday, prompting investors to warn that further selling was likely ahead and that a bear market for the Nasdaq Composite Index couldn’t be ruled out after the Trump administration failed to calm fears about a potential U.S. recession.

The carnage hit the tech-heavy Nasdaq particularly hard, with it falling 727.90 points, or 4%, to close at 17,468.32, its lowest since Sept. 11, 2024. The percentage drop was the largest since Sept. 13, 2022.

The Nasdaq last week fell into a market correction, defined as a drop of 10% from a recent high. A correction turns into a bear market with a pullback of 20%. The index ended Monday down 13.4% from its record finish of 20,173.89, set on Dec. 16.

The blue-chip Dow Jones Industrial Average skidded 890.01 points, or 2.1%, to finish at 41,911.71, after dropping 1,189 points at its session low. The S&P 500 shed 155.64 points, or 2.7%, to close at 5,614.56, down 8.6% from its record close of 6,144.15, set on Feb. 19.

“This could continue,” Peter Cardillo, chief market economist at Spartan Capital Securities, said on Monday, adding that the Nasdaq being in a correction and the S&P 500 being on the cusp of one could “bring on more selling until it exhausts itself.”

He added: “Is it too early to talk of bear market? The potential of a bear market in the Nasdaq is pretty high, at this point.”

President Donald Trump on Sunday tried to downplay the impact his tariff polices were having on businesses during an interview with Fox News Channel’s “Sunday Morning Futures.” Trump also said he wasn’t ruling out the possibility of a recession this year. “I hate to predict things like that,” he said when asked about a recession. “There is a period of transition because what we’re doing is very big.”

Kevin Hassett, who heads the National Economic Council, attempted to allay recession concerns on Monday during an interview with CNBC.

“But the market speaks for itself,” Spartan’s Cardillo said, adding that the U.S. bond market was “flashing a possible recession” signal and that Treasury yields could keep declining.

The stock-market selloff is a result of a “spike in uncertainty” tied to worries over the economic impact of tariffs as well as other concerns, including a looming showdown over the debt ceiling and efforts to extend the tax cuts enacted during Trump’s first term, said Tom Essaye, founder of Sevens Report Research, in a Monday note.

The fear is that uncertainty will cause consumers and businesses to “hole up” and wait for clarity, sparking an economic slowdown and a fall in S&P 500 earnings, he said, noting that the index is seen as “very vulnerable” to a 10% pullback given that it was still trading at over 21 times expected earnings.

Essaye said he appreciates those fears and agrees that if they’re realized, the S&P 500 could see a pullback extend to 10% or more. But he emphasized that at present, “it’s fear driving this market, not actual bad data,” while corporate earnings have held up and analysts have yet to deliver wholesale cuts to earnings estimates.

The benchmark 10-year Treasury yield has declined from its recent 4.8% peak as inflation concerns give way to fears about the economy. Treasury yields and prices move opposite to each other.

Falling bond yields point to expectations on Wall Street that the Federal Reserve might need to cut interest rates to shore up a damaged economy.

Fed Chair Jerome Powell on Friday said the economy was in fine shape. But the tone in markets has significantly soured as tit-for-tat tariffs have materialized with major U.S. trading partners, raising questions about whether the U.S. central bank might need to abandon its cautious approach to rate cuts in 2025.

“The market went from exuberance to despair in just a couple of weeks,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities USA.

Investors face not only uncertainty around Trump’s approach to tariffs, immigration and the economy, but also the prospect of a potential government shutdown on Friday without a deal in Congress.

“Really what the bond market is concerned with is slowing growth momentum, exacerbated by trade and fiscal uncertainty,” Goldberg told MarketWatch.