Stocks Hit as Economic Fears Spur Flight to Bonds: Markets Wrap

This content was published on March 10, 2025 - 14:34

4 minutes

(Bloomberg) — Anxiety that tariffs and government firings will torpedo growth in the world’s largest economy extended a three-week stretch of volatility across global markets Monday. American stocks fell as Wall Street forecasters tempered bullish views while demand for recession havens boosted sovereign bonds in the US and Europe.

The S&P 500 extended its slide from a record to nearly 8% after erasing all of its gains since Donald Trump was elected president on the strength of what Wall Street considered his “pro-growth” agenda. Benchmark Treasury yields have fallen almost 30 basis points in the past month on bets that an economic slowdown would provide more room for the Federal Reserve to slash interest rates. Amid all the jitters, more than 10 high-grade companies considered delaying US corporate bond sales Monday.

Trump said the US economy faces “a period of transition,” deflecting concerns about the risks of a cooldown as his early focus on tariffs and federal job cuts causes market turmoil. Asked on Fox News’ Sunday Morning Futures whether he’s expecting a recession this year, Trump said, “I hate to predict things like that. There is a period of transition, because what we’re doing is very big.”

“There are always multiple forces at work in the market, but right now, almost all of them are taking a back seat to tariffs,” said Chris Larkin at E*Trade from Morgan Stanley. “Until there’s more clarity on trade policy, traders and investors should anticipate continued volatility. This week’s inflation numbers will provide another test.”

A chorus of Wall Street strategists is warning about higher stock volatility, with Morgan Stanley’s Michael Wilson the latest to sound the alarm on economic growth worries. Other market forecasters including at JPMorgan Chase & Co. and RBC Capital Markets have also tempered bullish calls for 2025 as Trump’s tariffs stoke fears of slowing economic growth.

The S&P 500 fell 1.5%. The Nasdaq 100 slid 1.9%. The Dow Jones Industrial Average slipped 1.2%.

The yield on 10-year Treasuries declined seven basis points to 4.24%. The Bloomberg Dollar Spot Index wavered.

The latest moves mark an abrupt about-face for markets, where the dominant driver of the last few years had been the surprising resilience of the US economy even as growth weakened overseas. That’s shaking the aura of economic and market exceptionalism that has dominated for more than a decade.

Investors are turning increasingly unnerved by whipsawing tariff policy, sticky inflation and the unknown pace of the Fed’s interest-rate easing. The Nasdaq 100 Index briefly slumped into a correction Friday as investors dumped the sector that propelled the stock market over the past two years.

From rookie retail traders to hedge fund pros, no one knows what the eventual cost of Trump’s sweeping policies really are. His pro-growth plans were tax cuts, deregulation and energy dominance. Tariffs were supposed to bring manufacturing back to the US and create jobs. But so far there’s little evidence of that.

All of this has mom-and-pop investors spooked. For the first time since 2022, the majority of individual investors say they believe stock prices will drop over the next six months, according to a survey by the American Association of Individual Investors. Fewer than 20% say they expect prices to rise over that period.

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