In just two weeks, the S&P 500 has erased all of its gains since Donald Trump was elected, while the Nasdaq 100 briefly dipped into correction territory—down over 10% in just 17 days. The once-unshakable Magnificent Seven tech stocks have also taken a hit, with Nvidia alone shedding nearly $1 trillion in market value.
So, what’s going on? And more importantly, what should investors do next?
Markets Are Nervous About Stagflation
Here’s the problem: inflation is still sticking around, but now unemployment is also ticking higher. That’s a dangerous combination known as stagflation, where slow growth meets persistent inflation—something markets really don’t like.
Trump’s administration has been cutting the federal payroll while also pushing new tariffs on Canada, Mexico, and China. While tariffs were originally sold as a way to bring manufacturing jobs back to the U.S., the actual impact has been mixed at best. And when Trump recently told Americans to brace for a “little disturbance” from trade wars, it didn’t exactly inspire confidence.
“The market is very confused about Trump’s tariff plans,” says Jeremy Siegel, a finance professor at the University of Pennsylvania. “Is this just a negotiating tactic? We don’t know yet.”
Why Tech Stocks Are Feeling the Heat
For years, investors have relied on mega-cap tech stocks as a safe haven during market turbulence. But right now, even those stocks are leading the sell-off. Nvidia, Microsoft, Apple, and others have all taken a hit, dragging down portfolios that were heavily weighted toward tech.
Hedge fund manager Thomas Thornton, who has raised his cash levels to the highest in years, says investors are still too eager to buy. “Good bottoms happen when people can’t get out fast enough and nobody wants to buy,” he says.
What’s Next? Keep an Eye on These Catalysts
Over the next few weeks, several key events could determine where the market heads next:
- March 19 Fed Meeting – The Federal Reserve will decide on interest rates, and traders are watching closely for signs of potential rate cuts later this year.
- Inflation Report (March 13) – A new consumer price index (CPI) report could give clues on whether inflation is still running hot.
- Job Openings Data (March 12) – The strength of the labor market will be in focus, especially with rising unemployment concerns.
- New Tariffs (March 13) – The next round of Trump’s steel and aluminum tariffs are set to take effect, adding more volatility.
Investor Sentiment Has Turned Bearish
It’s not just professional traders who are concerned—retail investors are worried, too. A recent survey by the American Association of Individual Investors found that, for the first time since 2022, the majority of individual investors believe stock prices will drop over the next six months.
And they might not be wrong. Wall Street strategists have already started lowering their stock market targets for 2025. At the start of the year, analysts were predicting a 13% gain for the S&P 500. Now, that forecast is down to 10%—and falling.
What Should Investors Do Now?
If you’re a long-term investor, don’t panic—but be prepared for more volatility. Market pullbacks like these can often create opportunities to buy strong companies at discounted prices.
At the same time, it’s smart to:
- Stay diversified – Don’t put all your eggs in the tech basket. Consider sectors like healthcare, industrials, and consumer staples that tend to be more stable.
- Keep some cash on hand – Having dry powder allows you to take advantage of potential buying opportunities.
- Think long-term – Short-term headlines can be scary, but history shows that markets tend to recover over time.
As trader Dennis Dick puts it: “Be prepared for more ‘Trump pumps’ and ‘Trump dumps.’ The president never stops talking, and it feels like my head is on a swivel.”
With so much uncertainty ahead, now is the time for investors to stay informed, stay patient, and stick to their long-term game plan.
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