“The bull market is dead”: futures continue to fall, and the chances of a recession in the US are growing
7 April 09:33
Three days after the announcement of new US tariffs against almost all countries in the world (except Russia, Belarus, North Korea, and Cuba), markets are still feverish, futures are still falling, and Goldman Sachs is raising its recession forecast for the US to 45%. This is stated in the review Komersant ukrainskyi.
Stock market crash and falling futures
U.S. stock futures opened with a sharp drop on Sunday evening, signaling the continuation of a two-day selloff that has resulted in the loss of trillions of dollars in market value.
According to Reuters, at the opening bell, futures on the S&P 500 index were down 4%, Dow futures fell 3.8%, and Nasdaq 100 futures dropped 4.6%. Investors are expecting another week of turbulence as trading partners react to tougher-than-expected tariff restrictions.
Earlier, within two days of Trump’s announcement of the new duties, the benchmark S&P 500 index fell by 10.5% and lost about $5 trillion in market value. This is the largest two-day drop since March 2020. The precipitous drop on Thursday and Friday brought the S&P 500 down more than 17% from its all-time high on February 19, approaching a bear market, which is usually defined as a 20% drop.
The US is on the verge of recession
Leading investment banks have sharply raised their forecasts of the likelihood of a recession in the US over the next 12 months.
Immediately after the announcement of the tariffs, Goldman Sachs increased its estimate of the probability of a US recession from 20% to 35%. Today, on Monday, Goldman Sachs estimates this possibility at 45%, according to Reuters.
The background for this is a sharp deterioration in financial conditions and growing policy uncertainty, which is likely to lead to a greater reduction in capital expenditures than previously forecast, the bank believes.
Last week, several other investment banks revised their recession risk forecasts. In particular, J.P. Morgan estimated the probability of a recession in the US and the world at 60%.
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“The bull market is dead”
“The bull market is dead. We may see some gains in the next few days, but they will not be sustainable now,”
– Mark Malek, chief investment officer at Siebert Financial , said before the futures opened.
The timing of the announcement of the new duties, which coincided with the start of the first quarter reporting season, contributes to the gloomy outlook, Malek added.
Bear and bull markets
A bear market is a period when the stock market experiences a prolonged decline lasting more than two months. Officially, a bear market occurs when stock prices decline by 20% or more from their recent highs. It is a condition characterized by investor pessimism, falling stock prices, and a general decline in economic activity.
A bull market is the opposite phenomenon, when the stock market demonstrates a steady increase in the value of shares. During a bull market, optimistic sentiment prevails, investor confidence grows, trading volumes increase, and economic indicators tend to improve.
Both terms are metaphors that describe the way the market moves: a bear paws from top to bottom, while a bull raises its horns from bottom to top.
Some traders believe that the stock market will at least try to stage some sort of recovery. We’ll probably have an up day this week,”
– said Steve Sosnik, chief investment strategist at Interactive Brokers, before the futures open.
However, the question of the sustainability of any rally remains.
“We may see a day this week when the screens are green, but any sustained rally may not come for three to four weeks. At that point, people will start to say that we’ve let enough air out of the balloon,”
– comments Alex Morris, Chief Investment Officer at F/m Investments.
Reaction of Trump and his administration
US President Donald Trump has warned foreign governments that they will have to “pay a lot of money” to remove the comprehensive tariffs, characterizing the measures as “medicine”. This statement did not help stabilize financial markets on Monday.
Trump said he was not worried about the losses, which have already wiped out trillions of dollars in stock markets around the world, Reuters reports.
“I don’t want anything to fall. But sometimes you need to take medicine to fix something,”
– he said, returning from a weekend of golf in Florida.
Trump said he spoke with leaders from Europe and Asia over the weekend who hope to persuade him to reduce the tariffs, which could be as high as 50% and are set to take effect this week.
“They are coming out to negotiate. They want to negotiate, but there’s no negotiating unless they pay us a lot of money every year,”
– Trump said.
Trump’s top economic advisers have tried to present the new tariffs as a reasonable reconfiguration of the US position in the global trade order. Treasury Secretary Scott Bessent said that more than 50 countries began negotiations with the United States after the announcement last Wednesday. Commerce Secretary Howard Luthnick said the tariffs would remain in place “for days and weeks.”
