Market Turmoil: Unyielding Clouds Cast Shadows Over S&P 500 and Nasdaq

In the past week, the S&P 500 has experienced significant fluctuations, either increasing or falling by 1% daily. This volatility is largely attributed to ongoing uncertainties surrounding economic policies, particularly President Trump’s proposed tariffs, which have left investors feeling uneasy. As a result, both the S&P 500 and Nasdaq Composite have just endured their worst weeks in six months.

Current Market Performance

The S&P 500 is currently sitting 6% below its most recent all-time high, while the Nasdaq Composite has fallen more than 10% from its peak. Our Chart of the Week illustrates that the downward trend has been accompanied by aggressive bounces, often triggered by Trump’s tariff threats or de-escalation announcements.

Investor Sentiment and Market Reactions

In this pressurized environment, even positive economic indicators have struggled to ease investor nerves. For instance, stocks experienced significant swings on Friday, dipping into the 5,600s before managing a modest gain, ultimately closing at 5,770. The market’s outlook for 2025 remains largely unchanged, reflecting a slowing economy.

Mark Zandi, chief economist at Moody’s, commented, “There’s a lot of clouds out there, some storms, things are getting pretty dark. So I think I’d soak this [jobs] number up. I think it might be the best number we get for a while.” This sentiment underscores the prevailing uncertainty regarding how long these clouds will linger and the potential severity of the storms they may bring.

Unprecedented Market Movements

Interestingly, the recent skittishness in the market is not a common occurrence. As of Friday, the S&P 500 had experienced swings of 2% or more for seven consecutive sessions. According to data from Yahoo Finance, this marks the longest stretch of such significant intraday movements in the benchmark index since August 2024.

Conflicting Economic Data

Rick Rieder, BlackRock’s chief investment officer of global fixed income, noted in a client communication that the current market conditions are marked by a plethora of conflicting data regarding the economy. He likened the situation to the arcade game “Asteroids,” where players must fend off a barrage of asteroids while keeping the game running. Rieder stated, “[The February jobs] report was just another asteroid coming at the markets, and presumably one of the asteroids that the Fed has to assess when determining when and if they can cut interest rates again.” He emphasized that the latest report did not indicate an urgent need for rate cuts, suggesting that interest rate volatility may persist for some time.

Looking Ahead: A Discovery Process

As the market navigates these turbulent waters, Lori Calvasina, head of US equity strategy at RBC Capital Markets, remarked, “For now, we remain in a discovery process. For stocks to bottom, we think clear evidence of resiliency in the hard economic data needs to emerge, and/or more clear indications of a bottoming in our sentiment, valuation, and earnings revisions indicators.” This highlights the critical need for investors to remain vigilant and adaptable as they assess the evolving economic landscape.

In conclusion, the current market conditions are characterized by uncertainty and volatility, with significant implications for investors. As the clouds persist, it remains to be seen how the S&P 500 and Nasdaq will navigate these challenges in the coming weeks.