The rollercoaster ride of the US stock market has taken a turbulent turn, significantly erasing all the post-election gains. The recent imposition of fresh tariffs on Canada, Mexico, and China has intensified the sell-off, causing a massive dip in the market. The S&P 500, which reached a record high of 6,144.15 on February 19, has shed about $3.3 trillion in market cap since then, marking a stark contrast to its previous gains right after the election.
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Market Performance
- The S&P 500 has plunged around 6% from its post-election highs, with the Nasdaq Composite following closely behind at nearly 6% down. The Nasdaq is now dangerously flirting with correction territory, on the brink of closing 10% off its peak. Meanwhile, the Dow Jones Industrial Average is barely managing to keep its head above water, trading just in the green for the year.
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Market Trends
- Just a few months ago, the stock market was soaring to consistent heights as investors rode the wave of enthusiasm following Donald Trump’s victory. Hopes for pro-business policies and tax cuts fueled a bullish atmosphere on Wall Street. However, this optimism has now been overshadowed as Trump’s tariff decisions have triggered concerns about economic growth and stubbornly high inflation rates.
- Financial Analysis
- According to Jonas Goltermann, deputy chief markets economist at Capital Economics, many trends that dominated the financial markets after the election have come to a standstill or reversed since President Trump took office. US Treasury yields have decreased, the 2-10s curve has flattened, and the dollar has weakened. The once-dominant "Trump trade" narrative has lost its momentum, leaving markets in a state of uncertainty.
The current scenario paints a worrisome picture of the US markets, with volatility and unpredictability ruling the day. Investors are bracing themselves for more turbulence ahead as global economic uncertainties and trade tensions continue to escalate. It is essential for stakeholders to closely monitor the evolving market landscape and adapt their strategies accordingly to navigate these challenging times.
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