T. Rowe Price: If the US economy and labor market deteriorated rapidly, the Fed would likely intervene.

Asset management firm T. Rowe Price said US stocks were sold off due to uncertainty over tariffs and a slowing economy, lagging global markets, with the S&P 500 down nearly 9% from its February high and the Nasdaq entering a correction. The firm believes that while volatility may persist, if the economy and labour market deteriorate quickly, the Fed and other central banks may step in to stabilise growth, with controlling inflation taking a back seat. As such, in the current environment of heightened risk aversion, the bond market may continue to provide support, with yields likely to fall further in the near term. Meanwhile, markets outside the US have held up relatively well. The core reason for the sell-off was the uncertainty over US tariff policy, which has led investors to reposition their expectations for a second Trump term. Mr Price expects market uncertainty to persist in the near term as the Trump administration continues to take aggressive policy actions to achieve long-term goals, which may put pressure on growth and sentiment and could re-ignite inflation. Mr Price believes a shift from a narrow market to a more diversified portfolio can provide stability during a market sell-off. The firm is closely monitoring the market as mispricings typically create investment opportunities.