Markets remain under pressure as key indices extend their losses, reflecting growing concerns among investors. The Stipelis Equity Index Indicator is now down 3% year-to-date and has dropped 11.5% from its highs, officially entering correction territory. This aligns with broader market trends, where rising uncertainty, fueled by trade policy concerns, continues to drive volatility.
A significant driver of the latest market downturn is today’s announcements on tariffs. Heightened trade tensions have rattled investors, leading to aggressive selling in equities. The S&P 500 is now down 11% from its highs, while the Russell 2000 has fared even worse, sinking 22% from its peak. These declines underscore the increasing risk-off sentiment among investors who are reevaluating their positions in the face of economic headwinds.
Beyond equities, currency markets are also feeling the impact. The U.S. Dollar Index, which had been weak, has now lost nearly 7% from its highs and is down 4% year-to-date. The dollar’s decline signals a shift in investor sentiment, with money flowing out of the currency amid concerns about slowing growth and potential Federal Reserve policy responses.
This market weakness follows a theme of caution that has been prevalent in recent discussions. Yesterday’s warning about maintaining a defensive approach remains relevant as uncertainty looms. Market participants are now navigating an environment where economic data, central bank policy, and geopolitical developments all contribute to heightened instability.
Looking ahead, investors should prepare for continued volatility. If trade disputes escalate further or economic data disappoints, markets could face additional downside pressure. However, opportunities may emerge for those willing to take a long-term approach and selectively position themselves amid the turbulence.
For now, the prevailing sentiment remains one of caution as the market digests recent developments and adjusts to the shifting landscape.
Stephen Coleman global Market Strategist 4-3-2025