S&P 500 Enters Bear Market as Tariff Fears Roil Wall Street

Markets began the week on edge after a tariff-driven selloff pushed the S&P 500 into bear market territory, capping its worst week since 2020 with a 10% drop—down over 20% from its all-time high. The Dow and Nasdaq followed suit, the latter also entering a bear market. Monday’s session was volatile: indices opened sharply lower, briefly rallied on a rumor of a 90-day tariff pause, then reversed after the White House dismissed it as “fake news.”

Investor sentiment crumbled after China retaliated against U.S. tariffs and President Trump doubled down, threatening even steeper levies unless demands are met. With a fresh round of tariffs set to hit April 9, recession fears deepened.

The CBOE Volatility Index (VIX) surged above 60 intraday—its highest since August 2024—highlighting investor anxiety. Goldman Sachs raised the odds of a U.S. recession in 2025 to 45%, while JPMorgan now sees a 60% global recession probability. They warn that Trump’s tariffs amount to a 2.4% GDP tax hike—the largest since 1968. Treasury yields have dropped as markets now price in up to five Fed rate cuts this year.

Sector performance was mixed. Real estate fell 2.4% Monday, the worst-performing sector, while communication services gained 1%. Tech stocks were a focal point: Apple fell 3.7%, now down nearly 30% YTD, hurt by its heavy China exposure. Tesla dropped 2.6% following bearish analyst notes, with Wedbush cutting its price target to $315 from $550. Nvidia rose 3.5%, Amazon gained 2.5%, and Broadcom surged 5.4%, offering rare bright spots in tech.

Wedbush slashed Apple’s price target to $250, warning of its vulnerability as 90% of iPhones are assembled in China. Tariffs now sit at 54% for Chinese imports and 32% for Taiwanese goods. Relocating even 10% of Apple’s supply chain to the U.S. could take years and cost up to $30 billion.

Trump intensified tensions via Truth Social, threatening an additional 50% tariff on Chinese goods if retaliatory measures aren’t lifted by April 8. He insisted investors must “take their medicine,” dismissing calls to delay tariffs despite market turmoil. Still, Treasury Secretary Scott Bessent hinted at potential negotiations, noting that over 50 countries have requested talks with Washington.

JPMorgan cut its S&P 500 year-end target to 5,200, with a downside scenario of 4,000. It now expects a 0.3% U.S. GDP contraction and rising unemployment in 2025. The firm warned that the effective average tariff could rise from 3% to 19%, severely compressing corporate margins. Deutsche Bank compared the market shock to the collapse of Bretton Woods, suggesting it could reshape global trade and geopolitical norms.

Adding to the uncertainty, Trump extended ByteDance’s deadline to divest TikTok’s U.S. operations by 75 days, tying the deal to ongoing trade talks. Interested parties include Amazon, Oracle, and Applovin.

Investors are now closely watching inflation data and Fed commentary for signs of a policy pivot. Thursday’s CPI will be critical; while Barclays expects a mild March print, it warns of sharp inflation later this year as April 2’s tariffs ripple through supply chains. The Fed’s rate-cut calculus may become more complex if stagflationary pressures emerge.

Earnings season begins this week with reports from JPMorgan, Morgan Stanley, Wells Fargo, and BlackRock. Retailers like Levi Strauss and Walgreens, and travel names like Delta, are also on deck. But analysts caution: even strong earnings may not offset the growing cloud of trade uncertainty.

As a result, the potential paths for the US500 are a bear case of 4,000, assuming no tariff relief and sustained geopolitical escalation; a base case of 5,200, if partial easing is achieved and recession risks are contained; and a bull case of 5,800, contingent on a breakthrough in trade negotiations and dovish Fed policy. However, with Trump threatening further tariffs on Chinese goods and inflation risks looming due to rising import costs, downside pressure remains pronounced. Earnings season may provide temporary relief, but unless macro headwinds subside, the market could remain volatile, with 4,000 being a real possibility if negotiations stall ahead of the April 9 tariff round.

Data for Technical Analysis (1D) CFD US 500 [S&P 500]

Resistance : : 5226.3, 5330.5, 5499.1

Support : 4889.1, 4784.9, 4616.3         

1D Outlook

Source: TradingView 

Buy/Long 1 If the support at the price range 4809.1 - 4889.1 is touched, but the support at 4889.1 cannot be broken, the TP may be set around 5307.0 and the SL around 4769.1, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 5226.3 - 5306.3, TP may be set around 5748.4 and SL around 4849.1, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 5226.3 - 5306.3 is touched, but the resistance at 5226.3 cannot be broken, the TP may be set around 4865.6 and the SL around 5346.3, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 4809.1 - 4889.1, TP may be set around 4424.2 and SL around 5266.3, or up to the risk appetite.       

Pivot Points Apr 8, 2025 03:34AM GMT