S&P 500 Drops 1% Back Into Correction Territory Amid Economic Uncertainty

The S&P 500 index experienced a decline on Monday, pushing it back into correction territory. This is defined as a drop of at least 10% from its recent highs. The index fell approximately 1% around 10 PM Beijing time. This decline marks the index's return to a correction phase, where it has been multiple times in the current downtrend. Since the start of the year, the S&P 500 has accumulated a decline of about 6%.

Investors are exercising caution in the U.S. stock market, with many believing that the timing for significant investments is not yet optimal. The S&P 500 has declined by 5.1% this year, while the MSCI All Country World Index ex USA has risen by 6.5% over the same period. The uncertainty surrounding tariffs and their potential impact on corporate earnings has left investors hesitant to make substantial moves.

Goldman Sachs has further lowered its year-end target for the S&P 500 index to around 5,700 points from 6,200 points. This adjustment is due to increased risks of an economic recession and uncertainty surrounding U.S. tariff policies. The new target suggests that the S&P 500 has only a 2% potential upside from its close on the previous Friday. The investment bank's strategists warn that the probability of a stock market correction has not yet peaked, indicating that U.S. stocks may face further declines. The bank's stock correction risk model predicts a high likelihood of a significant drop in the S&P 500.

The global market experienced a sell-off on Monday, March 31, with significant declines in the Japanese and South Korean stock markets, heavily impacted by auto tariffs. The U.S. stock market, which had already seen a correction of over 10% in the first quarter, continued to face pressure. The Chinese stock market, after a 20% rebound, also entered a period of consolidation and volatility.

The U.S. economy faces a 40% chance of entering a recession by 2025, according to a warning from a major U.S. bank. If unemployment rates rise and the economy enters a slump, the S&P 500 index could drop to 5,000 points. The U.S. economy is showing signs of deterioration, with a significant increase in job cuts and a decline in consumer confidence. The U.S. stock market is facing challenges, with the S&P 500 and Nasdaq indices entering correction territory. The market volatility is reminiscent of the 2008 financial crisis, with many on Wall Street feeling a sense of déjà vu. The U.S. financial market is undergoing a significant reset, with high valuations in the stock market being challenged and the bond market experiencing unprecedented selling pressure. The dollar index is volatile, and the yuan's movements are signaling a potential shift in the market. The U.S. stock market, particularly the tech-heavy Nasdaq, has seen significant corrections, with key AI stocks like Nvidia, Tesla, and Apple experiencing notable declines. The bond market is also sending strong liquidity warnings, with the yield curve inversion deepening and the 10-year Treasury yield approaching 4.5%. Moody's has issued a new warning about the U.S. sovereign credit rating, stating that the country's fiscal situation is spiraling out of control.