Nasdaq 100 extends freefall to 315+ points, S&P 500 erases 80-point surge

Wall Street is drowning in red again. The Nasdaq 100 has collapsed over 315 points, dragging tech stocks even lower. The S&P 500 has erased an 80-point rally, falling back below 5,600.

Just yesterday, stocks were climbing, but the sell-off has returned. The Dow Jones Industrial Average is down 256 points (0.6%), the S&P 500 is down by 1%, and the Nasdaq Composite has dropped by 1.6%, according to data from CNBC.

Investors are dumping stocks as geopolitical tensions heat up and trade war fears grow. This comes after two brief winning sessions. The S&P 500 entered correction last week and clawed back some gains, but it’s back in freefall. Since 3 PM ET yesterday, the index has lost over 100 points. The Nasdaq remains in correction territory, still down more than 10% from its last peak.

Tech stocks take another hit

Tesla is getting destroyed again. The stock is down over 5% after RBC Capital Markets slashed its price target, warning about rising EV competition. Tesla has lost nearly 36% in the past month.

Other tech giants are also struggling. Palantir is down over 3%, and Nvidia is down around 2%. The Technology Select Sector SPDR Fund (XLK) has dropped over 1%.

Traders are looking ahead to April 2, when President Donald Trump is expected to decide on tariff exemptions for Canada and Mexico. “The markets are going to remain choppy up until whatever decision is made on April 2,” said Rhys Williams, chief investment officer at Wayve Capital. He also said that investors are rotating out of high-growth tech stocks into sectors that have underperformed in recent years.

The pullback wipes out two sessions of gains. Stocks surged on Friday and Monday, but now those gains are gone. The S&P 500 is back in correction mode, and investors are on edge about what’s coming next.

Investors focus on Federal Reserve and recession fears

Markets are waiting for the Federal Reserve’s two-day policy meeting, which starts today. Traders are watching for Wednesday’s interest rate decision and Fed Chair Jerome Powell’s press conference. According to CME’s FedWatch tool, there’s a 99% chance the Fed will keep rates unchanged.

Not everyone thinks the market has hit bottom. “We don’t believe the market has bottomed yet, as we expect further choppy inflation and employment data over the next few months,” said Chris Senyek, chief investment strategist at Wolfe Research. “Additionally, with investors feeling significant ‘tariff fatigue,’ we expect policy uncertainty to linger at least until May.”

Nvidia is struggling ahead of its GPU Technology Conference (GTC). The stock fell 2.3%, dropping to around $116 per share in midday trading. Historically, Nvidia has outperformed during GTC week, but analysts warn this time might be different. The stock had a six-session win streak last year, only to see a double-digit pullback shortly after.

Consumer sentiment crashes, recession fears rise

The mood in America is getting worse. Unemployment expectations are now higher than 2020 levels and the worst since 2008. A Harris poll from May 2024 showed 56% of Americans believed the country was already in a recession.

Polling data from last year showed 49% of Americans thought the S&P 500 was down, even though it was actually up 12%. Now, consumer confidence is even worse.

Household income expectations are crashing. The median expected change in income for the next 12 months has fallen to its lowest level since March 2020. Inflation is making it even worse. Consumers now expect inflation to hit 6% over the next year, the highest since May 2023. Long-term inflation expectations are at 3.9%, the highest in 30 years.

Trump’s tariffs are driving inflation fears even higher. A record 60% of Americans now expect business conditions to decline over the next 12 months. Even in 2008, this number peaked at just 42%.

The market is already pricing in a recession. Since the Fed’s rate cuts began in September 2024, the S&P 500 has dropped 2%. In past recessions, the S&P 500 has dropped 6% in six months and 10% in a year following Fed rate cuts. The average post-pivot return is just 1% in six months.

A CNBC Fed Survey shows recession odds rising. In January, the probability of a recession was 23%. Now, it’s 36%. Institutional sentiment is also turning bearish. In The Economist/YouGov Poll from Friday, 37% of Americans believe the U.S. is already in a recession, while 31% are unsure, and only 32% think the country is not in a recession.

The job market is showing signs of stress. The professional and business services sector has lost 248,000 jobs since May 2023 and has now seen 17 straight months of contraction, which is the longest streak since 2008.

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