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Stocks Tank as Inflation and Tariffs Spark Chaos--Is the Market Headed for a Meltdown?
Stocks Tank as Inflation and Tariffs Spark Chaos--Is the Market Headed for a Meltdown?

Yahoo

time28-03-2025

  • Automotive
  • Yahoo

Stocks Tank as Inflation and Tariffs Spark Chaos--Is the Market Headed for a Meltdown?

Stocks took a hit today, and it doesnt look like things will be calming down anytime soon. The Dow Jones Industrial Average (DIA) dropped 1%, while the S&P 500 (SPY) and Nasdaq Composite (NASDAQ:QQQ) fell by 1.14% and 1.56%, respectively at 10.25am today. Consumer sentiment is sliding, with the University of Michigans latest survey showing a drop to 57 in Marchmarking the third straight month of weakening outlook. Inflation expectations for the year ahead surged to 5%, and its clear consumers are feeling the pinch. Rosenberg Research's David Rosenberg is calling itcracks are starting to show in consumer spending, and theyre coming from the top down. The high-end consumer market is starting to buckle, and thats a warning sign for the broader economy. Inflation's not going anywhere, and its showing up in the numbers. The February Personal Consumption Expenditures (PCE) data came in hotter than expected, with a 0.4% monthly increase in core PCEhigher than the 0.3% forecast. Year-over-year, core PCE climbed to 2.8%, raising more questions about the Feds next move. Even though consumer spending increased by 0.4%, it wasnt as strong as expected. This mixed data is leaving investors wondering if the Fed will raise rates sooner than anticipated, which could cause further turbulence in the market. Were seeing inflation hold firm, and that means the Fed's policy decisions will be critical to how stocks react in the short term. And just when you think its all about inflation, trade tensions are making the situation even messier. Trumps proposed 25% tariff on cars not made in the U.S. is already shaking up the auto industry, and its not looking like things will settle anytime soon. Reports suggest the EU is trying to find a way to ease these tariffs, but its a tough road ahead. With tariffs escalating in early April and no clear resolution in sight, theres more volatility to come. Investors should buckle upthis markets ride is about to get bumpier. This article first appeared on GuruFocus. Sign in to access your portfolio

Here's how far stocks could drop if a full-blown recession strikes
Here's how far stocks could drop if a full-blown recession strikes

Yahoo

time27-03-2025

  • Business
  • Yahoo

Here's how far stocks could drop if a full-blown recession strikes

The S&P 500 could see 12% drop if a recession strikes, according to Bank of America. Strategists said they see a recession sending the S&P 500 to 5,000 in their bear case. Wall Street has had its eye on a potential downturn amid tariff uncertainty and growth concerns. Investors who think a recession is in the cards this year should brace for a double-digit correction to rattle the stock market, according to Bank of America. Strategists at the bank said they see the S&P 500 potentially dropping to as low as 5,000 in the event unemployment rises and the economy tips into a downturn. That implies the benchmark index dropping another 12% from levels on Wednesday. After dropping to 5,000, the bank thinks the index could rebound, ending the year around 5,500. The index is down more than 3% year-to-date. Fresh tariff concerns on Wednesday sparked a sell-off late in the session as traders reacted to news from the White House that President Donald Trump would announce auto tariffs at 4:00 p.m. ET. The S&P 500 dropped more than 1%, while the tech-heavy Nasdaq Composite fell 2%. "US labor market is gradually weakening. Eventually it accelerates to the upside and initial thrust tends to dent stocks. The US yield curve is steepening from inversion," the bank said, pointing to the inversion in the 2-10 Treasury yield curve, a notoriously accurate gauge for a coming recession. That said, Bank of America's base case is for stocks to end the year higher. Strategists said they saw the benchmark index trading between 5,885 and 6,175, implying as much as 7% upside from current levels. A recession is on the radar of more Wall Street forecasters lately. Fears of a downturn have climbed in recent weeks, particularly as markets digest weakening economic data and fret over the impact of tariffs. The median market-implied recession odds across 20 asset classes and sectors climbed to 33% last week, up from a 0% market-implied probability in November, according to an analysis from David Rosenberg, economist and the president of Rosenberg Research. GDP, meanwhile, is expected to shrink 1.8% this quarter, according to the latest Atlanta Fed GDPNow reading. "The implication for investors, as GDP estimates get ratcheted lower, is to reduce overall portfolio risk until more clarity emerges on the path ahead. We recommend tactically increasing defensive sector exposure in the equity portfolio, while simultaneously overweighting fixed income relative to stocks," Rosenberg wrote in a note last week. Read the original article on Business Insider Sign in to access your portfolio

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