It’s looking rough out there again for stocks with US futures being hammered after yesterday’s losses. The S&P 500 closed down by nearly 5% and while that looks bad, the chart below still shows that the latest rout isn’t that ugly in the bigger picture. That despite the declines being over 12% from the recent highs.
S&P 500 index weekly chart
That being said, Trump’s tariffs are coming at a time that is making for the right blend for an equities correction.
It is either tariffs impact consumption activity and that feeds into a worse economic climate for companies to work with. Or tariffs eat into their bottom line and bite at corporate profitability. Either way, somebody loses.
Then, you have US tech giants also being given a reality check from China amid recent AI developments. And suddenly, the darling in the equities space over the past year or so is falling out of favour. But I would say, this is a “healthy” correction.
The ball is now back over to Trump’s court to see if wants to offer any help for stocks amid the latest selloff. But judging by his comments yesterday here, we’ve not quite reached that pain threshold yet.
And that is the main issue that dip buyers need to be aware of as the market focus continues to be on recession risks for the time being.
Looking to the day ahead, the US jobs report will serve as a litmus test for that as well. If the numbers are bad, it will be seen as an amplifier to recession risks and continue to exacerbate market fears ahead of the weekend.
