Corrections Not Bear Market: BofA Calls for Trump and the Fed’s Policies Moves

TradingKey – U.S. President Donald Trump’s trade war is eroding confidence in the stock market and dimming economic optimism. Bank of America argues that U.S. stocks are undergoing a “correction” rather than entering a bear market, as Trump and the Federal Reserve may soon pivot their policies.

Michael Hartnett, Chief Investment Strategist at BofA, recently stated that the U.S. stock market is experiencing a correction rather than a true bear market. He warned that a sustained bear market could risk triggering a recession, which would force shifts in Trump’s trade policies and the Fed’s monetary stance.

Hartnett advised investors to consider buying the S&P 500 index if it falls to 5,300 points. The index currently stands at 5,638.84, down over 4% year-to-date.

Trump’s erratic tariff war has amplified market unease. For the week ending March 12, global equity funds saw outflows of $2.8 billion, the largest weekly withdrawal since the start of 2025. During this period, the S&P 500 also plunged more than 10% from its record high.

Harris Financial Group noted no one was blinking on the trade war yet and that was troubling to clients. The market thought Trump was bluffing. Now investors are living through the difficulties of it.

Amid rising uncertainty, fears of a U.S. recession have intensified. Many analysts now urge the Fed to cut interest rates sooner to bolster confidence and stave off an economic downturn.

The Federal Reserve is set to announce its March policy decision on March 19. Markets widely expect rates to remain unchanged, with the first cut of 2025 anticipated as early as June.