Global stock markets have taken a hit due to President Trump’s tariffs, leading to the S&P 500 entering bear market territory for the first time since 2022. Despite the decline, Trump remains adamant about continuing with the tariffs. This has raised concerns about the economic outlook, with analysts warning of a possible recession if the trade policies continue.
A bear market is a sustained downturn when a stock index closes 20 percent below its peak, signaling investor pessimism about the economy. The S&P 500 is close to officially being in a bear market after a drop of 17.4 percent. This has led to concerns about the impact of Trump’s trade agenda on the economy. Market declines can offer investment opportunities, but there is a higher level of uncertainty given the current situation.
Historically, the stock market has always recovered from bear markets. The last bear market in 2020 due to the coronavirus outbreak recovered within six months. Bear markets, which have occurred 15 times since 1929, last an average of 18.9 months. They are sometimes precursors to recessions, leading to job losses and economic contraction.
The origin of the terms bull and bear markets dates back to London in the 18th century. While Trump has called for interest rate cuts to combat market turmoil, the Federal Reserve has taken a cautious approach. The new wave of tariffs set to come into effect could further impact the markets. Overall, the uncertainty surrounding Trump’s trade policies and their impact on the economy has led to increased volatility and concerns about a potential recession.
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