The US stock market rebounded strongly on Friday (March 14th), with the S&P 500 index rising more than 2% in a single day, marking the largest daily increase since November last year. The market is gradually getting rid of the uncertainty of the trade war and the decline in consumer confidence, while US Treasury prices are rising synchronously, and gold prices have exceeded $3000 per ounce.
The Dow Jones Industrial Average rose 674.62 points, or 1.66%, to close at 41488.19 points.
The Nasdaq index rose 451.08 points, or 2.61%, to close at 17754.09 points.
The S&P 500 index rose 117.42 points, or 2.13%, to close at 5638.94 points.
The Philadelphia Semiconductor Index rose 145.55 points, or 3.27%, to close at 4598.79 points.
Focus on individual stocks:
Meta (META-US) rose by 2.96%; Microsoft (MSFT-US) rose 2.58%; Amazon (AMZN-US) rose 2.09%; Apple (AAPL-US) rose 1.82%; Alphabet (GOOGL-US) rose 1.68%.
TSM-US rose 1.46%; NVDA-US surged 5.27%; Applied Materials (AMAT-US) surged 3.81%; AVGO-US rose 2.18%; Qualcomm (QCOM-US) rose 3.05%; AMD (AMD-US) rose 2.92%; Micron (MU-US) surged 6.23%.
Before the latest wave of decline, Trump escalated the conflict with the United States' largest trading partner, reiterating his intention to mass deport undocumented immigrants and lay off tens of thousands of federal employees. At a time when US economic data shows signs of weakness, these policies may overturn the resilience of the labor market and increase pressure on rising prices.
The duration and depth of the sell-off are closely related to the question of whether an economic downturn or recession is imminent, "said Ross Mayfield, investment strategist at Baird Private Wealth Management. If the degree of economic weakness is limited, or if there are policy 'put options' from the federal government or the Federal Reserve to prevent the market from falling freely, many 10-15% declines quickly reverse
Michael Hartnett of Bank of America (40.89, 1.22, 3.08%) predicted on Friday that the rapid decline in the US stock market could trigger policy intervention from Trump and Federal Reserve officials. However, so far, Trump and his advisers have given bulls almost no reason to expect policy changes, especially in trade. The equivalent tariffs imposed by the United States on all countries with trade relations will be implemented on April 2nd, and economists warn that this will bring price pressure.
The Federal Reserve will release its latest policy decision on Wednesday, and investors are betting that it will not cut interest rates.
Mayfield stated that the degree of economic deterioration is still limited and policy uncertainty can be quickly corrected, but if tariff uncertainty persists and suppresses consumer and business confidence, the stock market sell-off may be deeper and longer lasting.
Whether the judgment of economic recession is correct or not may be the key to whether investors suffer general losses or major failures. According to data compiled by Baird, since 1965, the average pullback during non recession periods has been 16%, while stock market sell offs during recession periods have averaged a 36% decline.
Since reaching its peak on February 19th, the S&P 500 index has lost approximately $5 trillion in market value. The uncertainty of the impact of tariffs on economic and corporate growth and inflation prospects has hit the stock market, which has achieved its best two years of performance since the Internet boom in the late 1990s.
Now traders want to know how much worse the situation will get. During the bear market in 2022, the S&P 500 index fell 25% from peak to trough. If the same situation occurs this year, the S&P 500 index will fall to around 4700 points. The index closed at 5521 points on Thursday.
If we continue to be in this fluctuating tariff environment, businesses will be at a loss, "said Kevin Gordon, senior investment strategist at Jiaxin Wealth Management. In addition, all pessimism in the market is purely emotional, and the market needs to go through a behavioral adjustment phase in order to prepare for an uptrend
As the rebound becomes more elusive, Wall Street institutions are also making adjustments. Goldman Sachs (541.41, 16.60, 3.16%) Group strategists have lowered their forecasts for the S&P 500 index to reflect the decline over the past three weeks. Even the outspoken bull Ed Yardeni lowered his expectations for the index by about 9% and even warned that the risk of stagflation caused by tariffs has risen.
The oversold level of the stock market has also reached a rare level. The relative strength index of the S&P 500 index is currently 27, which is less than 1% lower than this level since the beginning of this century. Although Ramsey of Leuthold Group referred to this as the first stage of a bear market, he said, "The market has already fallen enough to trigger a rebound of several percentage points at any time
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