Today, the stock market plummeted. As of 9:40am today, the Dow Jones Industrial Average opened down over 400 points and quickly fell over 550 points (a drop of 1.3%). The larger S&P 500 dropped 1.5%, and the cue-heavy Nasdaq Composite lost 2%. The rout is driving the S&P 500 toward its first down quarter since September of 2023. It has already plummeted more than 4% from the beginning of the year.
The yield on the 10-year Treasury note dropped to 4.27% as investors flocked to government bonds in search of safety. Gold futures in New York jumped to their highest ever level over $3,100. As economic uncertainty, financial instability, and inflation fears spiked, investors rushed to safe havens. The Cboe Volatility Index, or VIX, a widely used gauge of stock market volatility, jumped by 10%, a sign that investors are anxious.
Economic indicators added to the market’s unease. Personal Consumption Expenditures (PCE) index was up 2.5% in February, the same as January, with no revision, and in line with expectations. The core PCE index, which excludes volatile categories such as food and energy, ticked up slightly to 2.8% from 2.7%.
The deepening of America’s trade war with its largest trading partners added to uncertainty and global market jitters. The recent announcement of tariffs on autos is doing just that, threatening to upend the deeply intertwined supply chain that spans all of North America. Analysts at Barclays predict that these developments could lead to the S&P 500 falling to 5,900 from its current level of 6,600.
“We think the proposed tariffs as announced would deliver a big hit to the auto industry, stoking higher costs, higher prices and a sharp decline in US sales.” – Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management
“There is no doubt that just as yesterday’s market session was dominated by worries about tariffs, today’s session and the sessions until April 2 (“Liberation Day”) will also see traders preoccupied with tariffs.” – Thierry Wizman, global FX and rates strategist at Macquarie
Goldman Sachs is responding to the current economic storm by moving its year-end target on gold prices up significantly. Now they’ve upped the ante, moving their target from $3,100 to $3,300. Ed Yardeni, president of investment advisory Yardeni Research, recently raised his year-end forecast for the S&P 500 by a whopping 50%. He raised it to 6,400, up from 7,000.
“While the economy appears solid, business executives are adopting a cautious stance on new investments, largely due to the Trump administration’s aggressive and unpredictable tariff policy.” – Matt Stephani, president of Cavanal Hill Investment Management
In response to these economic challenges, Goldman Sachs has revised its year-end target for gold prices upward to $3,300 from $3,100. On the other hand, Ed Yardeni, president of investment advisory Yardeni Research, lowered his year-end target for the S&P 500 to 6,400 from 7,000.