S&P 500 Avoids Bear Market Despite Trade Tensions

U.S. stocks managed to erase pre-market losses and stabilize in early trading, avoiding a bear market. The S&P 500 index, which had plummeted in pre-market trading, managed to recover and avoid falling into a bear market. This stabilization came despite the ongoing trade tensions, which have been a major source of market volatility.

The early trading session saw the S&P 500 index recover from its pre-market decline, temporarily avoiding a bear market. This recovery was crucial as it prevented the index from falling more than 20% from its February high, a threshold that would officially mark a bear market. The market's resilience in the face of escalating trade tensions was a notable development, as investors seemed to be holding out hope for a resolution to the ongoing disputes.

The broader market sentiment was influenced by the escalating trade war, which continued to cast a shadow over global financial markets. The uncertainty surrounding the trade policies and the potential for further escalation kept investors on edge. Despite the early recovery, the underlying tensions remained, and the market's stability was fragile at best.

Investors are fleeing longer-term U.S. Treasuries at an accelerated pace, with the 30-year bond yield briefly surpassing 5%. A key indicator of U.S. investment-grade credit panic surged to its highest level since May 2023. Safe-haven assets such as gold, the Japanese yen, and the Swiss franc all rose in tandem.

Alexandre Baradez, a chief market analyst, noted that the trade war has intensified, leaving investors with little to rely on. He emphasized that the U.S. bond market is no longer a safe haven for investors and is instead exerting pressure on the stock market.

Following Trump's announcement that the U.S. plans to impose high tariffs on pharmaceuticals soon, pharmaceutical stocks experienced a decline. Companies such as Pfizer, Eli Lilly, and Merck saw their stock prices drop by more than 3% in pre-market trading. Meanwhile, Delta Air Lines withdrew its full-year financial guidance, highlighting the spreading turmoil in the U.S. corporate sector.