It was a difficult week, when the market officially entered the correction stage, which is defined as a drop of more than 10% in the index. As of Friday morning, since mid-February, the S&P 500 and Nasdaq have lost 10.1% and 13.7%, respectively. This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
What happened? There are many reasons, both fundamental and emotional. Fundamentally, markets have been “overheated” for some time. Growth is great, but it doesn’t last forever, especially with a cooling economy, persistent inflation, and the Fed unwilling to cut rates. As Jerome Powell stated, the Fed has “no rush” and will wait for more clarity, possibly at next week’s meeting—though major decisions seem unlikely.
However, Powell is no longer the most influential figure in financial markets—that title now belongs to Donald Trump. His words alone can send market capitalization soaring or crashing by hundreds of billions. The emotional turmoil in “Trumpland” makes Wall Street look like a rollercoaster. Investors, who expected a different show, are left questioning their choices.
Trump’s relentless trade war is both shocking and alarming. In just two months, he has alienated allies and disrupted global trade. His unpredictable tariff policies cost investors billions, with markets suffering their worst drop since 2022. One might fantasize about Trump admitting all his policies—tariffs, Russia relations, Musk’s powers, DOGE, even buying Greenland—were just a joke. But reality is harsher: trillions in investor wealth have vanished.
Tesla’s stock crash deserves special mention. Last Monday, shares plunged 15.5%, wiping out $120 billion. Despite this, UBS still considers Tesla overvalued, while JP Morgan predicts a rebound to $800 per share within a year. The biggest boost to Tesla? Trump buying a Model S and posing with Musk at the White House. At least it wasn’t a Lada!
Inflation data had little market impact, despite better-than-expected figures. Interestingly, stock and bond markets reacted differently—stocks ticked up, while bonds signaled concern. The real problem? The U.S. deficit hit $1 trillion just halfway into the fiscal year, with February alone adding $307 billion—2.5 times January’s figure.
The hero of the week? Gold! In uncertain times, investors seek safety. Prices finally broke $3,000 per ounce and may reach $3,500 by Q3, given Trump’s economic “vision” and four more years in office.
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
