Nasdaq 100 Is Now in Bear Market Amid Growth Scare: Markets Wrap

(Bloomberg) — A selloff in stocks deepened, bonds climbed and oil tumbled to a four-year low as Federal Reserve Chair Jerome Powell signaled the damage of a trade war will be bigger than anticipated, with the potential effects including higher inflation and slower growth. 

Despite the economic risks from President Donald Trump’s trade war such as China’s decision to retaliate, Powell reiterated a wait-and-see approach on rates. The S&P 500 saw its worst two-day plunge since March 2020 in a sellof that slashed over $5 trillion in value, with the gauge down 6% on Friday. The Nasdaq 100 entered a bear market. Treasury 10-year yields slid three basis points to 3.99%. The dollar rose 1%.

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“The action within the market is shouting recession,” said Doug Ramsey, chief investment officer at the Leuthold Group. “And market action itself is very often the final catalyst that pushes you into recession.”

The latest jobs report showed resilience, but that was before aggressive levies start making their way through the economy. Trump blasted China for retaliating against his sweeping tariff plan and vowed his economic policies “will never change.”

Later, the president noted he had a “very productive call” with Vietnam, spurring a rally in firms that have large manufacturing operations in the country, including Nike Inc. and Lululemon Athletica Inc.

Megacaps plunged, with Nvidia Corp. and Tesla Inc. slumping over 7%. US-listed Chinese stocks like Alibaba Group Holding Ltd. and Baidu Inc. also tumbled. A gauge of big banks hit the lowest since Aug. 7. The Cboe Volatility Index jumped to the highest since April 2020.

Several forecasters are turning ice cold on US equities, telling investors to refrain from buying the selloff amid the specter of a recession.

Bank of America Corp.’s Michael Hartnett told investors to “short” risk assets until Trump pivots away from tariffs and toward tax cuts, higher energy supply, deregulation and an aggressive increase in the debt ceiling. UBS Global Wealth Management’s Mark Haefele cut his rating on US stocks to neutral.

The chief executive officer of Roubini Macro Associates, whose doom-laden warnings accompanied key moments of the financial crisis in 2008, predicted that the stock market correction may deepen before investor sentiment then stabilizes as Trump dials down his global trade onslaught. 

“Even if in the next few weeks it looks like we’re going to start negotiations, and you get a de-escalation, I think the market corrects a little bit more, bottoms out,” Nouriel Roubini said at a gathering of economists and business leaders on the banks of Lake Como in Cernobbio, Italy.

A few others are finding opportunities. Ed Yardeni of eponymous firm Yardeni Research said it was time to buy the dip.

A “great buying opportunity is being created here,” the Wall Street veteran said in a Bloomberg Television interview. “The market is giving a big thumbs down to this tariff policy.”

Investor Bill Gross said in a post on X that “next week may present some opportunities.” He noted that the US financial market is “highly levered” and that leverage is unwinding “without value considerations.”

“Still waiting for this falling levered knife to hit bottom,” he added.

The fastest US stock market selloff since the depths of the Covid pandemic has left valuations looking cheap. But if a recession is inevitable due to the global trade war, the definition of inexpensive becomes relative.

Historically, the S&P 500’s trailing price-to-earnings ratio slides to an average of 15.6 during routs that precede economic downturns, according to data compiled by Sam Stovall at research firm CFRA. It’s currently around 22 despite the recent selloff.

JPMorgan Asset Management’s David Lebovitz says stocks have hit dip-buying territory, based on his view that the US will still dodge a tariff-induced recession.

Lebovitz, who helps shape the allocation priorities of the $3.6 trillion money manager, has been waiting for the S&P 500 to hit the 5,100 level — which it broke below on Friday. 

“The cheaper equities get, the more interested we become,” said Lebovitz, the global strategist at the bank’s multiasset solutions strategy team, in an interview. “If you look over time, going underweight equities in a non-recessionary year oftentimes does not work well from a return perspective.”

Wall Street has been befuddled by Trump’s vision of bringing manufacturing operations back to the US, something that would be extremely costly and take years if not decades to accomplish.

JPMorgan Chase & Co. said it now expects the US economy to fall into a recession this year after accounting for the likely impact of tariffs announced this week by the Trump administration.

“We now expect real GDP to contract under the weight of the tariffs, and for the full year (4Q/4Q) we now look for real GDP growth of -0.3%, down from 1.3% previously,” the bank’s chief US economist, Michael Feroli, said Friday in a note to clients, referring to gross domestic product.

Economists generally expect that tariffs will lift inflation and slow growth, keeping the Fed in wait-and-see mode. But the debate over the path of interest rates on Wall Street has ramped up after the tariff announcement.

“The risk to growth outweighs the risk of higher inflation based on the current US tariff policy,” said Anthony Saglimbene at Ameriprise. “Thus, we believe the Federal Reserve may need to act sooner rather than later by cutting its policy rate if it also believes or sees a deterioration in the labor market based on current fiscal policies.”

Money markets have priced in nearly four quarter-point rate reductions this year, up from just three cuts before the levies were announced Wednesday. 

“While investors are hoping that the Fed comes to the rescue, it’s unclear how a few potential rate cuts this year will undo the economic damage that these tariffs are likely to cause,” said Emily Bowersock Hill at Bowersock Capital Partners.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 6% as of 4 p.m. New York time
• The Nasdaq 100 fell 6.1%
• The Dow Jones Industrial Average fell 5.5%
• The MSCI World Index fell 6%

Currencies

• The Bloomberg Dollar Spot Index rose 1%
• The euro fell 1% to $1.0944
• The British pound fell 1.7% to $1.2876
• The Japanese yen fell 0.6% to 146.95 per dollar

Cryptocurrencies

• Bitcoin rose 2.1% to $84,024.64
• Ether rose 0.8% to $1,811.63

Bonds

• The yield on 10-year Treasuries declined three basis points to 3.99%
• Germany’s 10-year yield declined seven basis points to 2.58%
• Britain’s 10-year yield declined seven basis points to 4.45%

Commodities

• West Texas Intermediate crude fell 6.4% to $62.66 a barrel
• Spot gold fell 2.5% to $3,037.26 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Phil Kuntz, Isabelle Lee, Sujata Rao, Sagarika Jaisinghani and Anand Krishnamoorthy.

©2025 Bloomberg L.P.