Market Volatility Intensifies as Tariffs Escalate, Fears of Slower Economic Growth Linger

The start of March has been marked by a brutal reversal in market fortunes as investors grapple with the consequences of President Trump's recent tariff escalation and growing concerns over slower economic growth. The benchmark S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) have both erased their post-election gains, with the latter entering correction territory last week after falling 10% from its record closing high of 20,173.89 on December 16.

February's Jobs Report Offers Some Relief, But Stocks Continue to Suffer

Despite some relief provided by February's jobs report, which showed the US economy adding 151,000 jobs, the past week has been a brutal one for stocks. The S&P 500 capped off its worst week since September, with the Dow Jones Industrial Average plummeting over 1,200 points at one point. The volatility has been intense, with the S&P (^GSPC) swinging 2% over the past seven consecutive sessions after hitting a record high on February 19.

Wall Street Watchers See Opportunities in Lower Valuations

Given these moves, some Wall Street watchers have said now is the time to take advantage of lower valuations, with the resiliency picture largely still intact. "Tariffs add uncertainty," Wedbush's Ives said. "But in my opinion it doesn't change the demand cycle. In other words, this is not going to end the tech bull market. It's a scare. But I believe it's more opportunities than the time to head for the hills."

Economists Warn of Growth Scare as Surveys and Sentiment Indicators Raise Concerns

In recent weeks, surveys and sentiment indicators have been the root cause of investor panic, marking the return of "bad news for the economy is bad news for stocks." ISM's manufacturing prices paid came in at their highest since June 2022, while new orders fell into contraction, suggesting a stagflationary environment in which growth slows but price increases remain elevated.

Tariffs and Inflation: A Growing Concern

Rising inflation would squeeze consumers' purchasing power and weigh on demand at a time when the consumer is already feeling the pinch of higher prices. Less demand for goods means lower sales for companies, which would pressure profit margins and eventually force businesses to cut jobs and lay off employees.

Federal Reserve Likely to Intervene to Stop Bleeding

The Federal Reserve has already indicated it would step in to stop the bleeding if inflation continues to rise and growth slows. Following Friday's jobs report, markets continued to price in three rate cuts this year. The intensifying market volatility and growing concerns over slower economic growth have left investors wondering what the future holds.

Expert Analysis

Evercore ISI's Julian Emanuel has a year-end S&P 500 price target of 6,800 and notes that "stocks suffer bear markets when complacency sets in." He believes market dips are buying opportunities in 2025's volatile environment. Ed Yardeni from Yardeni Research also sees the economy as remarkably resilient, citing expectations of increased consumer and capital spending, along with a potential deescalation of tariff concerns.

What's Next for Investors?

As markets continue to grapple with the consequences of President Trump's recent tariff escalation and growing concerns over slower economic growth, investors are left wondering what the future holds. With lower valuations and a resiliency picture largely still intact, some Wall Street watchers see opportunities in this volatile environment. However, the intensifying market volatility and growing concerns over inflation and growth may leave investors with more questions than answers.

Market Reactions

The S&P 500 (^GSPC) has swung 2% over the past seven consecutive sessions after hitting a record high on February 19. The Nasdaq Composite (^IXIC) has entered correction territory last week after falling 10% from its record closing high of 20,173.89 on December 16. The Dow Jones Industrial Average plummeted over 1,200 points at one point in the past week.

What Trump's Tariffs Mean for the Economy and Your Wallet

Read more about the impact of President Trump's tariffs on the economy and your wallet.

Evercore ISI's Julian Emanuel: Stocks Suffer Bear Markets When Complacency Sets In

"Stocks suffer bear markets when complacency sets in." - Evercore ISI's Julian Emanuel

Ed Yardeni from Yardeni Research: Economy Will Turn Out to Be Remarkably Resilient

"The economy will turn out to be remarkably resilient," says Ed Yardeni from Yardeni Research.