empty
31.03.2025 10:58 AM
US stock market runs into trouble

Rumors about mutual tariffs and another blow to consumer confidence triggered the second-worst sell-off of the S&P 500 this year. Investors are still holding piles of US stocks, but the threat of a recession due to the White House's tariff policy is forcing them to sell toxic assets. This could lead to a significant correction in the broad stock index.

Daily dynamics of the S&P 500

This image is no longer relevant

US stock markets entered 2025 with a high level of optimism. However, the first quarter turned out to be the worst for the S&P 500 compared to European equities since 2015. It's no joke to say that investors in Europe have already lost 13% from the fall in the broad stock index and the weakening of the US dollar against the euro!

They have only themselves to blame. By the end of 2024, the share of US stocks owned by non-residents reached 20%, compared to 7% at the start of the century. The proportion of US-issued equities in global stock indices surged from 47% in 2008 to 72%! The retribution for excessive enthusiasm about American exceptionalism was inevitable.

The share of US stocks in global stock indices

This image is no longer relevant

The reason for the love of US stocks was the anemic growth of stock indices abroad, the rapid expansion of the US economy, and corporate profit growth driven by artificial intelligence technologies. Even with the latest sell-off, the S&P 500 has jumped 170% over the last decade. In comparison, the UK's FTSE 100 has only gained 30%. The US simply had no competitors.

They appeared in 2025. First and foremost, this refers to Europe. For the first time in years, the rationale for purchasing stocks issued in the Old World is not only their cheapness in terms of P/E. Germany's fiscal stimulus raises hopes for an economic boost. Besides, the belief in the imminent end of the armed conflict in Ukraine could release the region from geopolitical risks.

However, the EuroStoxx 600 will fall along with the S&P 500 by the end of March due to fears about import tariffs. According to sources from the Wall Street Journal, Donald Trump's mood has shifted again. One moment, he announces less severe mutual tariffs than investors had expected. Shortly after, he returns to the idea of universal tariffs and speculates about what the rates should be. The latter type of tariffs risks collapsing international trade and the global economy much faster than the mutual ones. Should we be surprised by sell-offs in stock markets worldwide?

This image is no longer relevant

Another drop in US consumer expectations to their lowest level since 2022, along with a rise in expected inflation, paints a stagflationary scenario for the US economy.

Technically, on the daily chart of the S&P 500, the success of the "bear" attack increases the risks of a further downtrend, rather than the previously forecasted consolidation in the range of 5,500 to 5,790. It would be wise to hold short positions opened during the rise to the upper border and then added from 5,670.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

GBP/JPY. Analysis and Forecast

During the European session on Monday, the GBP/JPY currency pair is approaching the 198.30 level. The pair finds some support from UK housing data: in June, house prices rose

Irina Yanina 19:40 2025-07-07 UTC+2

XAU/USD. Geopolitical Risks May Provide Additional Support to the Safe-Haven Precious Metal

Today, gold is displaying an intraday bearish tone despite rebounding from the $3300 level. Strengthening demand for the US dollar remains the primary factor pressuring gold, limiting its upward movement

Irina Yanina 19:09 2025-07-07 UTC+2

Bitcoin leads turbulent life

Beneath the calm surface of BTC/USD lie turbulent underwater currents that are reshaping the cryptocurrency market structure. Still waters run deep. On the surface, it seems that life

Marek Petkovich 15:48 2025-07-07 UTC+2

USD/JPY. Analysis and Forecast

The USD/JPY pair maintains a bullish bias, staying above the psychological level of 145.00, reflecting intraday selling pressure on the Japanese yen amid U.S. dollar strength. Investors are concerned that

Irina Yanina 12:59 2025-07-07 UTC+2

USD/CAD. Analysis and Forecast

On Monday, the USD/CAD pair continued its upward movement for the second day in a row. This rise is driven by a combination of factors. Crude oil prices initially declined

Irina Yanina 12:39 2025-07-07 UTC+2

GBP/USD. Analysis and Forecast

The GBP/USD pair began the new week attempting to hold the key psychological level of 1.3600. However, amid mixed fundamental factors, it has not been successful so far. The British

Irina Yanina 12:14 2025-07-07 UTC+2

Three days left to avert tariffs

As July 9, the deadline set by Trump, approaches, the United States main trading partners spent the weekend rushing to finalize trade agreements or lobbying for more time. Meanwhile, Treasury

Jakub Novak 11:24 2025-07-07 UTC+2

Investors see no alternatives

Uncertainty is commonly the enemy of investment, but not in 2025. A double dose of unpredictability – from geopolitics and White House tariffs – hasn't stopped the S&P 500 from

Marek Petkovich 11:17 2025-07-07 UTC+2

What to Watch on July 7th? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic publications are scheduled for Monday, and none of them are significant. Let us recall that Friday was practically a semi-holiday, as the United States celebrated Independence

Paolo Greco 08:29 2025-07-07 UTC+2

GBP/USD Overview on July 7, 2025

The GBP/USD currency pair remained nearly flat throughout Friday, as the U.S. trading session was essentially inactive on that day. There were no macroeconomic publications, and the market chose

Paolo Greco 07:25 2025-07-07 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.