empty
04.04.2025 11:10 AM
Old market rules broken

Someone is not telling the truth. Donald Trump insists that everything is going well and that the markets will flourish. But the S&P 500 just posted its worst 10-week start after Trump's inauguration since 2001, wiping out $3 trillion in market capitalization. Investors are losing faith in the Republican leader, while Fitch Ratings warns that tariffs are changing the rules of the game. We have entered an entirely new macro landscape. The winning bet of "buy the dip" no longer works.

Following the White House's sweeping import tariffs, the average US tariff rate has jumped from 2.2% to over 20%, marking the sharpest increase since the 1950s. Back then, it triggered a recession. History risks repeating itself. UBS estimates that GDP cloud shrink by 2 percentage points in 2025. Nomura forecasts modest growth of just 0.6%, while Barclays offers a slightly brighter view of a 0.1% contraction. Notably, when Trump took office, the economy was growing at 2.8%. Unsurprisingly, investors are selling dollars and stocks, abandoning the notion of American exceptionalism.

S&P 500 performance in absolute and percentage terms

This image is no longer relevant

The S&P 500 has entered correction territory again, although full-blown recessions have historically seen losses of 20% or more — still a long way off. Nonetheless, the index's downward trajectory signals recession risks ahead. Markets are currently pricing in a 48% chance of a downturn in the next 12 months, up from 38% before the White House tariff announcement on April 2, according to Polymarket.

UBS Global Wealth Management downgraded US equities to "neutral" from "most favored" and cut its year-end S&P 500 forecast to 5,800 from 6,400, citing tariff-induced volatility. Hedge funds dumped stocks in March at the fastest pace in 12 years, according to Goldman Sachs.

Wall Street analysts have trimmed their 2025 earnings growth forecasts for US corporates to 9.5% from 13% in January. Despite falling P/E multiples, the current valuation of the S&P 500 at 20 times earnings still looks stretched relative to historical norms.

Global equities vs. bond yields

This image is no longer relevant

This image is no longer relevant

The White House's tariff blitz has not just rocked US markets — global equities are also reeling. Risk aversion has pushed up the correlation between MSCI's global index and 10-year US Treasury yields. At the same time, US equities are underperforming their international peers, putting pressure on the US dollar.

Technically, the daily chart shows that the S&P 500 is still in a correction from its broader uptrend. Both downside targets at 5,500 and 5,400 were hit on short positions. While a brief rebound in the broad index is possible, as long as it trades below 5,500, the bias remains towards selling.

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

What to Pay Attention to on April 8? A Breakdown of Fundamental Events for Beginners

Once again, no macroeconomic events are scheduled for Wednesday. However, the market is paying little attention to traditional macroeconomic indicators, so standard economic reports are unnecessary. The market is entirely

Paolo Greco 06:57 2025-04-09 UTC+2

GBP/USD Overview. April 9. Disinformation, Rumors, Fakes, and Opinions

The GBP/USD currency pair traded relatively calmly on Tuesday, but Monday brought a full-on whirlwind to the markets. For several days now, we've been using terms like "storm," "chaos,"

Paolo Greco 02:55 2025-04-09 UTC+2

EUR/USD Overview. April 9. The American Circus

The EUR/USD currency pair traded much more calmly on Tuesday. That's no surprise—the market has already reacted to all the news about tariffs and counter-tariffs, and the actual implementation date

Paolo Greco 02:55 2025-04-09 UTC+2

NZD/USD. Analysis and Forecast

The NZD/USD pair is attempting to regain positive momentum, supported by renewed US dollar selling. However, given the underlying fundamentals, bullish traders are advised to proceed with caution. Investors appear

Irina Yanina 19:45 2025-04-08 UTC+2

Market gives away its secret

The world is a stage, and people are its actors. Tragicomedies happen every day in financial markets, but what happened at the start of the second week of April

Marek Petkovich 11:49 2025-04-08 UTC+2

Will Tomorrow Be Better Than Yesterday? (There is a risk of renewed decline in AUD/USD and gold prices)

It's easy to stay optimistic and hope that decision-makers act according to your wishes. Why does this occur? And why can it be a trap for investors? The market sell-off

Pati Gani 09:25 2025-04-08 UTC+2

What to Pay Attention to on April 8? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic events scheduled for Tuesday. However, the current market environment is hardly affected by the macroeconomic background. At this moment, the market has no use for standard

Paolo Greco 07:35 2025-04-08 UTC+2

GBP/USD Overview. April 8. Now It's the Pound Plunging into the Abyss

The GBP/USD currency pair continued its near-crash-like decline throughout Monday. Can anyone even explain, in hindsight, what's happening in the markets right now? There are no questions regarding the drop

Paolo Greco 06:07 2025-04-08 UTC+2

EUR/USD Overview. April 8. 2025 – The Year of Trade Wars

The EUR/USD currency pair traded with notable volatility on Monday. Particularly for a so-called "boring Monday," with no significant events scheduled. Yet yesterday was anything but boring—many experts have already

Paolo Greco 06:07 2025-04-08 UTC+2

The Pound Attempts to Hold Within the Bullish Channel

The United Kingdom is among the few G20 countries that got off relatively lightly—it was hit with a 25% tariff on car exports and a 10% tariff on other goods

Kuvat Raharjo 00:58 2025-04-08 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.