Jim Cramer explains why the White House sent Wall Street into a panic

CNBC’s Jim Cramer opined on how President Donald Trump helped cause Monday’s intense decline, suggesting investors are panicking as he reverses course from his previous term. This time around, Cramer said, the president seems to favor more populist ideals, and his prior focus on the market has taken a back seat as he sets his sights on tariffs.

“Of course, not many investors saw this coming — and that’s incredible to me — and the shock from Trump’s change in attitude has terrified the money-men,” he said. “Virtually overnight, they’ve decided that we’re headed for a recession, and it’s going to happen fast.”

The sell-off mentality that’s been prevalent on Wall Street for the last few weeks heated up on Monday. The S&P 500 shed 2.7%, the Dow Jones Industrial Average sank 2.08% and the Nasdaq Composite suffered its steepest lost since 2022, plummeting 4%. Investors are dismayed by the uncertainty brought about by Trump’s mercurial tariff policies, which could disrupt global trade and alienate U.S. allies. Trump further stoked recession fears over the weekend, when he said it is likely there will be “a period of transition” for the economy.

Trump has sent market into tumult by indicating it’s not currently his focus, Cramer said. Like former President Joe Biden, Trump “seems to accept that stockholders…usually are wealthy people, and that they’ve done well enough,” he continued. Investors, Cramer added, believe the U.S. is headed for recession because it is a consumer country, and consumers are threatened by the strife at the White House. While he conceded that such a comparison might be a little too extreme, he suggested that some investors liken Trump to former president Herbert Hoover, who raised tariffs that worsened the Great Depression. He also said Wall Street is spooked by a new challenge to the artificial intelligence boom — Chinese startup DeepSeek, which could have developed a way to run advanced technology cheaper and more efficiently and than the current dominant players in the field.

Some of Monday’s frantic sellers got poor prices, Cramer said, adding that some were also “ripped off on their buys,” because they bought recession-proof stocks so quickly after stocks began to decline. He recommended buying “some low multiple techs and industrials and banks here,” but said to stay out of tech giants he formerly referred to as the “Magnificent Seven,” saying such a high-performing group no longer exists.

Cramer added that he doesn’t think Trump will lighten up on his tariff policies just because the indexes are in distress.

“The president can roll them back if he wants to, but he genuinely believes these tariffs are the right thing to do, which is why they’ll probably keep coming with no finesse whatsoever, just brute force.”

“Since President Trump was elected, industry leaders have responded to President Trump’s America First economic agenda of tariffs, deregulation, and the unleashing of American energy with trillions in investment commitments that will create thousands of new jobs,” White House representative Kush Desai told CNBC. “President Trump delivered historic job, wage, and investment growth in his first term, and is set to do so again in his second term.”

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