Financial powerhouses are distancing themselves from Trump, issuing a significant economic caution sign.
stockmarkets are reeling due to the rollercoaster of economic policies under President Donald Trump, with the S&P 500, the Dow, the Nasdaq, and the Russell 2000 all experiencing a downturn. The S&P 500 entered correction territory on Thursday, falling 10% from its all-time high, while the Nasdaq reached a correction weeks prior.
The market, which had initially embraced Trump but later turned against his policies, is now heavily negative. The CNN's Fear and Greed Index has plummeted into "Extreme Fear." In spite of a modest comeback expected on Friday, investors have been pouring money into safe havens such as government bonds and gold, with treasury yields plummeting and spot gold prices matching a record high of $3,000 a troy ounce.
The market's negative sentiment is due to concerns that Trump's policies could inflict damage to the economy. Trump's tax cuts and deregulation had initially boosted the market, but his threat of massive tariffs on America's trading partners has left investors uncertain. Art Hogan, chief market strategist at B. Riley Wealth Management, said, "This market is just blatantly sick and tired of the back and forth on trade policy. It feels as though the administration continues to move the goal posts."
Consumer confidence has also taken a hit, with the Conference Board's Consumer Confidence Index registering its biggest monthly decline since August 2021 and the consumer sentiment survey from the University of Michigan showing the biggest fall since records began in 1978. Companies like Target, Walmart, and Delta Air Lines have reported that tariffs and inflation are causing a decrease in spending.
Despite Trump's insistence that the stock market's fall is because of the inflationary problems he inherited from former President Joe Biden, mainstream economists argue that Trump's policies could be more damaging. Uncertainty about tariffs is paralyzing businesses, and mass layoffs of federal workers could harm local economies. JPMorgan economists even forecast a 40% chance of a recession in the US this year due to "extreme US policies."
Interestingly, Trump himself appears to be ignoring the market as of late, having been noticeably quiet about it. Visiting the New York Stock Exchange in December, Trump had praised the stock market, calling it "very important." But as stocks erased their post-inauguration and post-election gains, Trump shifted his tune, stating that it's not viable to watch the stock market closely. Investors, feeling neglected by Trump, are now returning the favor by turning their back on him. CNN's Matt Egan and John Towfighi contributed to this report.
Strategists, weighing the impact of President Donald Trump's economic policies on the business sector, are increasingly concerned about a potential recession. The uncertainty surrounding tariffs and potential damage to the economy is causing many investors to ignore the rush in stock markets and instead pour their money into safe havens like government bonds and gold. Despite President Trump's assertions to the contrary, mainstream economists argue that his policies could be more detrimental to stock markets and the broader economy, with JPMorgan economists even forecasting a 40% chance of a recession due to these "extreme US policies." Ironically, President Trump himself seems to be ignoring the market's downturn, having been noticeably quiet about it, which could further deter investors.
