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

What to Pay Attention to on June 20? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic reports scheduled for Friday. The only report of the day will be the UK retail sales report. No economic data will be released today

Paolo Greco 07:45 2025-06-20 UTC+2

GBP/USD Overview – June 20: The Bank of England Didn't Surprise

The GBP/USD currency pair traded relatively calmly on Thursday, given the fundamental backdrop available to the market. On Wednesday evening, the Federal Reserve announced the results of its latest meeting

Paolo Greco 07:16 2025-06-20 UTC+2

EUR/USD Overview – June 20: Summing Up the Fed Meeting

The EUR/USD currency pair traded relatively calmly on Wednesday and Thursday. Recall that the results of the latest 2025 Federal Reserve meeting were announced on Wednesday evening, but we didn't

Paolo Greco 07:16 2025-06-20 UTC+2

USD/JPY. Analysis and Forecast

The Japanese yen is showing weakness against the stronger U.S. dollar, with the USD/JPY pair reaching a new monthly high. This rise in the dollar against the yen is mainly

Irina Yanina 20:12 2025-06-19 UTC+2

Bank of England to Keep Rates Unchanged

Today, the Bank of England is expected to keep interest rates at 4.25% and signal that it is maintaining its approach of one cut every other meeting, as policymakers

Jakub Novak 11:02 2025-06-19 UTC+2

The Fed Maintains Its Previous Position

The U.S. dollar responded with growth, while risk assets such as the euro and pound declined. Following yesterday's meeting, Federal Reserve officials stated they expect two interest rate cuts

Jakub Novak 10:58 2025-06-19 UTC+2

The Iran-Israel War Has Yet to Exert Significant Negative Influence on Markets (Limited downside risk for gold and upward momentum for #USDX remains possible)

As expected, the U.S. central bank left all key monetary policy parameters unchanged, once again citing ongoing uncertainty about the future state of the national economy—a factor that has become

Pati Gani 09:14 2025-06-19 UTC+2

The Market Keeps Its Options Open

While the White House and the Federal Reserve are in wait-and-see mode, the market has also decided to hold steady. Donald Trump has yet to make a final decision

Marek Petkovich 09:08 2025-06-19 UTC+2

What to Pay Attention to on June 19? A Breakdown of Fundamental Events for Beginners

No macroeconomic reports are scheduled for Thursday. The only points of attention today will be Christine Lagarde's speeches and the results of the Bank of England meeting, which will

Paolo Greco 06:45 2025-06-19 UTC+2

GBP/USD Overview – June 19: UK Inflation and the Bank of England Meeting

The GBP/USD currency pair traded relatively calmly on Wednesday, though the day before, it had posted a substantial decline in the second half of the session—more than 100 pips

Paolo Greco 04:02 2025-06-19 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.