Concerns over tariffs continue to create instability in the financial markets, pushing the S&P 500 into a correction phase and marking its lowest level in six months.
On Thursday, worries about tariffs had a significant impact on Wall Street, causing the S&P 500 to decline by 1.4% in a single day. This drop extended a three-week downward trend of more than 10%, qualifying it as a technical correction. The index has fallen over 6% year-to-date. Similarly, the Nasdaq 100 Index experienced a 1.9% decline, continuing its own correction phase, while the Dow Jones Industrial Average fell by 1.3% and is now nearly 9.3% below its record high from December.
Market analysts note that this recent downturn is particularly notable, taking place within just 16 trading sessions from the S&P 500’s peak on February 19. Historically, this marks one of the swiftest corrections observed since 1929. Market experts have indicated that while most corrections typically take about two months to fully develop, there remains a need for patience as stocks appear oversold following the fast-paced decline.
The situation has seen considerable drops in key stocks, with companies such as Tesla Inc. and Meta Platforms Inc. contributing to the overall pullback. Adobe Inc., in particular, has been a standout underperformer within the S&P 500, plummeting approximately 14% due to a disappointing forecast.
Related Stories
Despite some economic data suggesting resilience, market sentiment remains shaky, partly influenced by trade policy uncertainties. Recent layoffs in federal agencies and threats regarding deportation have further undermined confidence in the labor market’s stability.
Following a two-year growth streak, stock indices like the S&P 500 are struggling to regain stability. Analysts suggest that the index must reclaim its 200-day moving average near the 5,738 mark to stabilize. Technical indicators show the S&P 500 has reached oversold territory, with its relative strength index around 30, which typically indicates that a market selloff may have been overdone.
In the midst of this bearish sentiment, however, there is a flicker of hope for market bulls. A recent survey by the American Association of Individual Investors revealed a drop in the bull-bear ratio to 0.3, the lowest since September 2022, which historically has been associated with market bottoms during bear phases.
The market’s turbulence has been exacerbated by additional threats of tariffs on European alcoholic beverages from France, adding further uncertainty to the trading environment. Commentators note that the unpredictable tariff situation continues to weigh heavily on market dynamics.
In response to these developments, several major financial institutions have adopted a cautious outlook on U.S. stocks. Conversely, some analysts suggest that stocks may be pricing in a recession risk that exceeds what is indicated by credit markets, pointing to the potential for upward adjustments.
The recent volatility emphasizes the sensitivity of stock indices to shifts in geopolitical and policy landscapes, underlining the importance of vigilant financial monitoring during uncertain times.
