#239: How "big" is this stock market sell off?

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In this email:

• A full circle moment

• What’s weighing the market down? Will they continue?

• How “big” is this sell-off historically speaking?

A full circle moment

The US stock market has come full circle as recent declines have wiped out all gains seen since Trump's election. In the past week, markets are struggling to find stable footing and optimism.

• The recent reversal in stock prices highlights the fragile nature of market rallies driven by policy expectations, as the optimism around pro-business policies has been overshadowed by trade concerns.

• With escalating tariffs and economic uncertainty, investors are recalibrating expectations for corporate growth and overall market stability.

What’s Weighing the Market Down? Will They Continue?

• The primary driver of losses is the escalating trade war, with the U.S. imposing steep tariffs and trading partners retaliating, increasing costs for businesses and consumers.

• Financial stocks have been hit hard on Tuesday, with major banks like JPMorgan Chase and Bank of America seeing steep declines, signaling concerns over economic growth and lending conditions.

• Inflationary pressures from tariffs, combined with uncertainty over the Fed’s next moves, are likely to keep market volatility elevated in the near term.

How “big” is this sell-off historically speaking?

S&P500 is ~6% down from all time highs — seriously, it is not that bad.

IMO:

• This is the time to stay patient and buy gradually to dollar cost average (DCA).

• Notice the gray recessionary periods in the chart above — we’re far from it for now.

• If tariffs are the only going concern, I’d stay patient till first two quarters of Trump’s presidency and reassess then if the market is still this risk-off.

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