Reasons for the March 2025 US stock market crash

Major stock markets such as the US stock market, Japanese stock market, UK stock market, and Indian stock market have experienced consecutive general declines, especially the Nasdaq, S&P 500, and Dow Jones index in the US stock market have continued to decline. In the past five years, the US stock market has experienced a bull market. Why did there suddenly be a continuous decline in 2025?

1、 Mainly due to the combined impact of 9 major reasons

One is the impact of Trump's shock
Trump tariff policy: Recently, the Trump administration has implemented high tariffs on Canada, Mexico, and China (such as a 25% tariff on Canada and Mexico and a 20% tariff on China), which has raised concerns about a global trade war. Tariffs may push up the cost of imported goods, increase inflationary pressure, and put pressure on corporate profits, especially for technology and consumer goods companies that rely on supply chains. The market's expectation of economic slowdown and declining consumer confidence has increased, prompting investors to sell stocks.
The second is the impact of Federal Reserve policy uncertainty
The Federal Reserve has recently maintained high interest rates (possibly close to the highest level in two years) and reduced its expectations for interest rate cuts in 2025 (possibly only planning two cuts). High interest rates increase borrowing costs, suppress corporate investment and consumer spending, and thus affect stock market performance.
The third is the impact of weak economic data
Recent economic reports have shown a slowdown in US business activity growth (such as the S&P Global report), a contraction in the service industry, and consumer confidence dropping to a 15 month low (according to a survey by the University of Michigan), exacerbating market concerns about an economic recession.
The fourth is the pressure on technology stocks and the AI industry
NVIDIA's performance dragged down: As a leading company in the AI and semiconductor fields, NVIDIA's recent stock price has fallen by more than 6%, which may be a signal of market concerns about its future growth. Some analyses suggest that Nvidia's demand for AI chips may be limited due to intensified competition, especially after China's DeepSeek company launched low-cost and efficient AI models, the market is concerned that the dominant position of the US AI industry will be challenged.
The fifth reason is that the technology sector has risen too much and experienced a pullback
In 2024, technology stocks (especially the "Big Seven" such as Nvidia, Microsoft, etc.) drove the S&P 500 up more than 50%, but high valuations and expectations may lead to profit taking. At the beginning of 2025, technology stocks showed weak performance, especially against the backdrop of DeepSeek news and Nvidia's financial report expectations being lower than market expectations.
Sixth, the uncertainty of AI infrastructure
There are reports that Microsoft has cancelled some data center leases, implying that AI infrastructure spending may slow down, which further undermines the confidence of related stocks such as Nvidia and Palantir.
Market sentiment and technical aspects
Investors' risk aversion: Increased market volatility (such as a surge in the CBOE volatility index) and a decline in risk assets such as Bitcoin indicate investors' concerns about uncertainty. The continuous decline of the US stock market (such as Nasdaq's 6 consecutive declines) and technical indicators (such as KDJ overbought and RSI oversold) may trigger more selling.
Market concentration risk: The US stock market is highly dependent on a few large cap stocks (such as Nvidia, Apple, etc.), and once these stocks fall, it will trigger a widespread chain reaction. The callback of Nvidia in the screenshot may reflect the fragility of this concentration.
Eight is other external factors
• Global market linkage: sharp fluctuations in Asian and European markets (e.g., Japan's Nikkei 225 fell 12.4%) were transmitted to the United States, partly due to global supply chain disruptions and geopolitical tensions (e.g., the impact of the Russia-Ukraine conflict).
Nine is the decline in consumer confidence
Retailers (such as Wal Mart and Best Buy) warn that tariffs and inflation will push up commodity prices, and consumer spending may decrease, which will put pressure on the consumption dependent economy and the stock market.

2、 Investment advice and precautions
Short term: mainly adopt a wait-and-see approach, pay attention to support levels (such as around $110 for Nvidia) and technical indicator rebound signals. The progress of tariff policies, Federal Reserve interest rate cuts, and economic data will be key.
Long term: If the fundamentals (such as corporate profits) remain stable, a pullback is definitely a buying opportunity, but caution should be exercised against the risk of escalating the trade war.
Historical data shows that the maximum pullback of Nasdaq is around 32.47%, while the maximum pullback of S&P 500 is around 22.14%.
That is to say, historical data shows that this US stock adjustment is a golden opportunity to buy on dips.
After all, the vast majority of the world's most profitable and competitive companies are listed in the US stock market.