Fears that Donald Trump’s policies could harm the US economy have weighed on major US tech giants this year.
According to brokerage AJ Bell, the combined market value of the “Magnificent Seven” tech stocks has dropped by $1.57 trillion since the start of 2025.
Nvidia, Tesla, Amazon, Microsoft, Apple, and Alphabet have all seen declines, with Meta as the only company to have gained in value since last December.
Dan Coatsworth, investment analyst at AJ Bell, says:
“Tech stocks rallied when Donald Trump won the 2024 US presidential election on hopes of less stringent regulation. The euphoria around his return to the White House has now fizzled away, with all the S&P 500’s gains wiped out. That’s dampened investor sentiment in general.
“The dollar, as benchmarked by the trade-weighted DXY index, is down 5.4% from January’s peak, to erase the gains forged after the presidential poll.
“Investors are beginning to realise that Trump’s policies might have negative consequences, even for people in the US where the prospect of recession is now being talked up. A trade war is unsettling and there are far-reaching consequences if it blows up.
“We’ve seen a rotation into other areas such as cheap(er) stocks in the UK and Europe, and more defensive areas in the US like healthcare are getting their moment in the sun. Even China is attracting more attention as investors keep their fingers crossed for more government stimulus measures to prop up the economy.
“Investors have been sitting uncomfortably when it comes to the US and that’s made them look closer at their portfolios to consider if changes are needed. It’s natural to look at the areas that have previously done well and consider if it is time to lock in gains.”
Morgan Stanley Warns of Potential US Stock Market Decline
Morgan Stanley has cautioned that the US stock market could face a significant downturn by mid-year, as uncertainty surrounding Donald Trump’s tariff policies weighs on investor sentiment.
The Wall Street bank predicts the S&P 500 could fall another 5% to 5,500 points by mid-2025, following a 1.9% decline so far this year and a total drop of over 6% from its February peak.
Despite the near-term risks, Morgan Stanley maintains a year-end target of 6,500 for the index, which would represent a 12.7% gain from its last close.
“The path is likely to be volatile as the market continues to assess these growth risks, which could worsen before improving,” said strategist Michael Wilson.
