With Tuesday’s fall, S&P 500 has officially entered “correction territory”, meaning a drop of 10% from the peak.
At the session’s low, the Dow was down 800 points but benchmarks recovered after President Donald Trump said that he does not see an economic recession in the US.“I don’t see it at all. I think this country’s going to boom,” Trump said at the White House. He added that markets “are going to go up and they’re going to go down. But you know what, we have to rebuild our country.”
Wall Street is growing angsty as investors become increasingly unnerved by whipsawing tariff policy, sticky inflation and the unknown pace of the Federal Reserve’s interest-rate easing. Market forecasters at banks including JPMorgan Chase & Co. and RBC Capital Markets have tempered bullish calls for 2025 as Trump’s tariffs stoke fears of slowing economic growth.
“What Trump has been doing has not been helpful for US equity markets,” said Neil Dutta at Renaissance Macro Research. “For now, I don’t see recession. We’ve never really had a recession from policy uncertainty itself. And, we don’t yet know how markets would respond if Trump’s escalation now results in de-escalation later.”
Just minutes after erasing a 1.5% slide on hopes for a Ukraine-Russia truce, the S&P 500 resumed its slide — finishing 0.8% lower. While a rebound in megacaps like Tesla Inc. and Nvidia Corp. drove the market away from session lows, the vast majority of shares retreated. The Nasdaq 100 slid 0.3%. The Dow Jones Industrial Average sank 1.1%.
The yield on 10-year Treasuries advanced six basis points to 4.28%. The Bloomberg Dollar Spot Index fell 0.4%.Aside from a compelling argument that the market was overdue for a downturn of this magnitude, 10% corrections usually don’t become 20% bear markets unless they’re accompanied by either an economic recession, an earnings recession, or a Fed hiking cycle, according to Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.
To Matt Maley at Miller tabak, US stocks are a long way from a “great” buying opportunity.
“A ‘great’ buying opportunity comes after the stock market has fallen to a cheap level.” he said. “This does not mean that the stock market has to fall further. However, to call this a great buying opportunity is much is way too optimistic in our opinion.”
All eyes today are on the CPI report for the month of February.
US consumer prices probably rose in February at a pace that illustrates plodding progress on inflation for Federal Reserve officials. They may be content to remain on the sidelines to assess a policy whirlwind from the Trump administration.
Bureau of Labor Statistics figures on Wednesday are projected to show that the consumer price index minus food and energy climbed 0.3%, based on the median estimate of economists surveyed by Bloomberg. While less than January’s 0.4% gain in January, the magnitude of the increase leaves annual price growth elevated.
The so-called core CPI probably rose 3.2% from February last year. The data will inform the Fed’s preferred price gauge, which isn’t due until after the March 18-19 policy meeting. Interest-rate setters — now in a blackout period ahead of that gathering — have an inflation goal of 2%.
(With Inputs From Agencies.)
