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

XAU/USD. Analysis and Forecast

Today, gold is attracting new sellers. Amid a sharp escalation in the conflict between Iran and Israel, the United States conducted airstrikes on three Iranian nuclear facilities in Fordow, Natanz

Irina Yanina 17:59 2025-06-23 UTC+2

USD/JPY. Analysis and Forecast. The Japanese Yen Maintains an Intraday Bearish Outlook

Today, Monday, selling pressure on the Japanese yen dominates, driven by several factors. Traders continue to push back expectations of a potential rate hike by the Bank of Japan, assuming

Irina Yanina 17:56 2025-06-23 UTC+2

USD/CHF. Analysis and Forecast

At the moment, the U.S. Dollar Index (DXY) has reached a new two-week high, driven by hawkish signals from the Federal Reserve. The U.S. central bank has maintained its forecast

Irina Yanina 17:51 2025-06-23 UTC+2

Bitcoin longing for new highs, but something stymies

Bitcoin was created as a way to preserve value in times of turmoil, especially against the backdrop of weakening fiat currencies. It was believed that the arrival of institutional investors

Marek Petkovich 12:23 2025-06-23 UTC+2

Market fears retaliation

Hope for the best, prepare for the worst. Since the onset of the Israel-Iran conflict, the market seems to have largely ignored the severity of the situation. Investor reaction

Marek Petkovich 10:36 2025-06-23 UTC+2

The U.S. Joins the Iran-Israel War. What's Next for the Markets? (Limited downside potential for #NDX and #SPX contracts possible)

The United States could not abandon its satellite and Middle Eastern proxy—Israel—to face Iran alone. On Sunday, it struck Iran's nuclear facilities, though these strikes failed to achieve their objectives

Pati Gani 09:51 2025-06-23 UTC+2

What to Pay Attention to on June 23? A Breakdown of Fundamental Events for Beginners

A significant number of macroeconomic reports are set for Monday, though they share a similar nature. Business activity indices for June's services and manufacturing sectors will be released in Germany

Paolo Greco 06:51 2025-06-23 UTC+2

GBP/USD Overview – June 23: Geopolitics vs. Economy

The GBP/USD currency pair traded sluggishly throughout Friday, but one technical factor is worth noting: the price failed to consolidate above the moving average. Thus, technical analysis currently suggests

Paolo Greco 03:50 2025-06-23 UTC+2

EUR/USD Overview – June 23: The U.S. Has Officially Entered the War Against Iran

The EUR/USD currency pair traded with minimal volatility and no clear direction throughout Friday. The upward trend remains intact without any doubt. However, a significant strengthening of the U.S. dollar

Paolo Greco 03:50 2025-06-23 UTC+2

US-EU Negotiations on the Verge of Collapse

As anticipated, this phrase can describe nearly every action taken by Donald Trump. I have consistently argued that the core of any negotiations involving Trump comes down to this

Chin Zhao 00:13 2025-06-23 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.