In a dramatic turn of events, U.S. stocks are taking a nosedive as investors retreat from American markets. Growing concerns over President Trump's volatile trade policies and harsh criticisms directed at the Federal Reserve have left traders on edge.

On Monday morning, the S&P 500 plunged by 1.2%, dipping 15% below its record high just two months prior. Meanwhile, the Dow Jones Industrial Average dropped 430 points, reflecting a 1.1% loss, while the Nasdaq composite decreased by 1.5%.

What’s more alarming is the simultaneous decline in U.S. Treasury bonds and the dollar's value—a stark contrast to historical trends where these assets typically gain strength during market unrest. This unexpected shift points to growing fears that Washington's policies are jeopardizing the U.S.'s reputation as a safe investment haven.

Over the weekend, Trump doubled down on his tough trade stance, attended by warnings from economists that his proposed tariffs could push the economy into a recession. He expressed his views on social media, stating, 'He who has the gold makes the rules,' while dismissing critics of tariffs as poor performers in business and politics.

Tensions escalated with China, which has warned nations against signing trade deals that jeopardize its interests. The Chinese Commerce Ministry's statement emphasized that any such actions would result in stringent countermeasures.

Adding to the market's anxieties are Trump's ongoing frustrations with Federal Reserve Chair Jerome Powell. Criticizing the Fed for not cutting interest rates sooner, Trump’s dissatisfaction could lead to a potential shake-up at the helm of the central bank. Investors fear that a less independent Federal Reserve may struggle to control inflation in the long run.

Tech giants are feeling the heat as well, with several stocks tumbling ahead of critical earnings reports. Notably, Tesla's shares sank by 4.4%, trading roughly 50% lower than its record high in December amid concerns about inflated prices and its delicate association with Elon Musk.

On a brighter note, Discover Financial Services and Capital One Financial enjoyed gains after their merger was approved by the government, with Discover climbing 4.6% and Capital One up 2.6%.

In the bond market, short-term Treasury yields fell amid hopes that the Fed might lower interest rates to stimulate economic growth. However, long-term yields spiked, reflecting doubts about the U.S.'s stature in the global economy.

The dollar's value also took a hit against international currencies like the euro and the yen.

Globally, markets reacted, with Japan’s Nikkei 225 slipping 1.3%, while stocks in Seoul and Shanghai managed slight gains of 0.2% and 0.4%, respectively.