Warning signs in market suggest further challenges for US stocks

US stocks tumbled sharply this week, with the S&P 500 briefly entering correction territory as fears over Trump’s tariffs intensified concerns about economic growth.

The index has now fallen 9.3% from its February 19 peak, with tech giants like Nvidia and Tesla taking heavy hits.

“This is a classic S&P 500 selloff, with growth stocks taking it in the teeth,” said Patrick Fruzzetti, managing director at Rose Advisors. “With more bearish signals appearing, this could be ongoing for quite a while.”

Adding to investor anxiety, Trump’s mixed messaging on the risk of a recession has only deepened uncertainty. Over the weekend, he avoided making predictions, but later insisted, “I don’t see it at all.” Meanwhile, a Reuters poll found that 95% of economists in the US, Canada, and Mexico believe recession risks have increased due to the administration’s chaotic tariff policies.

Technical indicators flash warning signs

The S&P 500 fell below its 200-day moving average on Monday for the first time since late 2023, a historically bearish signal.

“We are starting to shift more toward a downtrend,” warned Adam Turnquist, chief technical strategist at LPL Financial.

Bespoke Investment Group noted that in similar cases, market returns over the next year tend to be significantly weaker. Meanwhile, the spread between junk bonds and Treasuries widened to its highest level since September, signaling rising concerns over economic growth.

Despite recent volatility, some investors see potential buying opportunities. “The stock market’s probably going to trade a little bit lower before we see some sort of a meaningful rebound,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

However, as uncertainty mounts, many analysts point to broader risks linked to how Trump’s trade wars are shaking markets.