Futures on the Dow Jones are down over 1,500 points, while those on the S&P 500 are down over 4%. If this fall holds, the index would join the Nasdaq and the Russell 2000 in a bear market, meaning a 20% correction from the top.
The Nasdaq futures are also down another 4%, having lost 6% each on both Thursday and Friday.
While the US 10-year yield remained near the 4% mark, yield on the two-year note fell to the lowest since 2022. Oil prices had plunged to a four-year low on Friday, while gold also witnessed profit booking. Haven currencies like the Japanese Yen and the Swiss Franc continued to strengthen.
“The bleeding continues because Trump or Bessent didn’t say anything to calm fears and now the bull run is about to sputter to a sad end,” Jay Woods, chief global strategist at Freedom Capital Markets, said by phone. “I’m sick of people saying we’re overdue for this. We’re still eagerly waiting to get a reprieve and nothing is happening. If we don’t hear from Trump very soon, the pain will continue.”
Federal Reserve Chair Jerome Powell on Friday signaled the central bank is on high alert for a spike in inflation, diminishing the likelihood of rate cuts any time soon.
“The Fed is not ready to step in and if the president thinks the economy is fine, he has no reason to step in,” said Neil Dutta, head of economics at Renaissance Macro Research LLC. “Investors need to know that the combined strike price on the policy put continues to decline.”
Strategists continued to downgrade their views on the US equity market, with Evercore ISI joining firms in saying it was too optimistic in its 2025 targets. RBC Capital Markets, Goldman Sachs Group Inc., Barclays and Yardeni Research all slashed theirs due to tariff uncertainty.
“We came into the year way too bulled up, and the question now is, what valuation you want to pay for a market that’s facing so much uncertainty?” said Michael Purves, chief executive officer at Tallbacken Capital Advisors. “Earnings are at risk, margins are at risk, higher inflation and lower growth is a combination that no one wants.”
Economists expect tariffs to touch off a price shock. A 10% universal tax on imports would imply a 1 percentage point increase in US consumer prices from its latest reading of 2.8%, estimates compiled by Ned Davis Research show.
The uncertainty has unleashed volatility on global financial markets. The Cboe VIX Index Index closed Friday above 45 for the first time since April 2020, while the volume of options on US exchanges topped 100 million for the first time as traders rushed for protection.
A gauge of Chinese stocks listed in the US plunged 8.9% on Friday, the most since October 2022, amid the turmoil after Beijing announced 34% tariffs on all imports from the US. That came during a holiday for Chinese and Hong Kong equities, which will restart trading on Monday.
(With Inputs From Agencies.)