Wall Street selloff deepens, White House pushes back against recession talk

The uncertain Wall Street markets have gone from being impacted by reactions to being impacted by no reactions. As a result of President Trump refusing to predict whether his tariff policies could lead to a recession today, major U.S. stock indexes sank.

The Nasdaq Composite slumped more than 3% after proving last week that its retreat from December’s record high was a correction. The S&P 500 slid 2%, down and about 8% from its all-time high.

Today, a key economic adviser to President Donald Trump has voiced the probable stance of POTUS. He pushed back against claims that uncertainty about his administration’s tariff policies could cause a recession. This came as a survey of American households showed that people were becoming less optimistic about their futures, and U.S. stocks continued to fall.

Kevin Hassett, who is in charge of the National Economic Council, said that there were many reasons to be optimistic about the U.S. economy, even though some people think the GDP will drop in the first quarter and there are worries about inflation. This is to say Trump is still in denial.

However, many people insist that a recession is possible. In fact, former White House comms director Anthony Scaramucci isn’t holding back. He says Trump’s tariff policies could drag the U.S. into a recession.

Wall Street experts take on the current market situation and recession

Trump was seen as the market’s savior, promising lower taxes and less stringent regulation. Now, his actions represent the harbinger of doom. The R-word is back on everyone’s lips as people ponder if trade tariffs will backfire and lead to recession rather than U.S. economic prosperity.

Dan Coatsworth, an investment analyst, said:

“The U.S. market sell-off is starting to look ugly. Many people have been worried about elevated valuations among U.S. equities for some time and are looking for the catalyst for a market correction. A combination of concerns about a trade war, geopolitical tensions, and an uncertain economic outlook could be that catalyst.”

He added, “During his first term as U.S. president, Donald Trump often cited a rising stock market as being representative of his success. As such, he will not want to see a full-blown market crash months into his second term.” True to this he had to postpone the Mexico and Canada tariffs. Clearly, he too can see the tariff formula has failed to work a second time.

According to Ross Mayfield, InvestmentStrategist, “The Trump administration seems a little more accepting of the idea that they’re OK with the market falling, and they’re potentially even OK with a recession in order to exact their broader goals. 

He added, “I think that’s a big wake-up call for Wall Street. There had been a sense that President Trump kind of measured his success on stock market performance, there was even somewhat of a ‘Trump put’ so to speak, and I think we’re seeing that’s not the case, so the market is starting to reflect that reality.”

It is no surprise. According to Chris Zaccarelli, the company’s chief investment manager, the NASDAQ has been risk-off all year. Today doesn’t add anything new to what we’ve seen over the last few weeks, but it does keep seeing the same things. Therefore, that’s just the bad combo of very high values at the beginning of the year and then more uncertainty.

Michael O’Rourke, chief market strategist, said:

“What he’s trying to enact is structural change… And every time you have structural change you’re going to have uncertainty and you’re going to have friction. It’s understandable people are starting to be a little concerned and starting to take profits.”

He advised, “Also, we’ve had this age of U.S. exceptionalism where the U.S. has massively outperformed… that’s also part of the backdrop that you could go invest in other places of the world with much lower multiples and maybe at least not be exposed to the expensive valuations of the U.S. while the U.S. pushes its structural shift.”

In the same light, Idanna Appio, Portfolio Manager, says that the pressure on U.S. assets in general shows that people are less sure about U.S. policy. It’s hard for businesses to make decisions when they don’t know how or where to spend. This kind of uncertainty is bad for business in general.

There is something to fix the uncertainty, according to Thomas Hayes, head of Great Hill Capital. He said that Japanese government bond yields are a better indicator of what’s happening in the U.S. market than tariffs. All that hot money was in Mag 7 during the carry trade, which is ending. That’s why the tech is down.

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