Monday saw a brutal selloff in U.S. equities, with recession fears, tariff uncertainty, and political instability driving a wave of risk-off sentiment.
🔻 $S&P 500(.SPX)$ : -2.7% (worst day of 2025) 🔻 $NASDAQ(.IXIC)$ : -4% (worst drop since Sept. 2022) 🔻 Dow Jones: -890 points (-2.1%)
Volatility surged—the $ $Cboe Volatility Index(VIX)$ spiked to 27.9, signaling a key inflection point for markets.
$VIX
1️⃣ Recession Talk Hits Wall Street Hard
Markets have been on edge for weeks, but President Trump’s Sunday comments on Fox News added fuel to the fire.
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Trump wouldn’t rule out a recession, calling the economic environment a “period of transition.” John Silvia (Economic Strategist): Market forecasts now price in a higher recession risk, impacting household and business expectations. 22V Research: "Uncertainty will remain high, keeping volatility elevated and leading to more short-term market reversals."
Investor takeaway: Confidence is fragile. Every new headline about tariffs, government shutdown risks, or economic slowdown adds to the sense of instability.
US10Y
2️⃣ Bear Market or Just a Correction?
Monday’s drop was statistically significant, raising two scenarios:
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A 2022-style bear market (25% drawdown, multiple 2%+ down days, and a prolonged VIX spike).
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A temporary correction before stabilization, given less aggressive Fed policy and no major external shock like the Ukraine war of 2022.
🔎 What’s different now? No runaway inflation like 2022. Fed is not actively hiking rates and earnings growth is still positive.
Investor takeaway: If the economy avoids a sharp downturn, stocks should stabilize soon.
"rule of 10 best days"
"rule of 10 best days"
3️⃣ The Fed Factor: No Lifeline (Yet)
A rate cut in March is still unlikely. Markets now see a 40% chance of a rate cut in May, up from 31% last week.
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Fed Chair Jerome Powell: The economy remains in a "good place," but tariff & policy risks are high. Inflation is trending toward the 2% target, but not quickly enough to justify immediate rate cuts.
Key risk: If markets continue to spiral, Fed rate cuts could be moved up—but not without clear economic deterioration. Investor takeaway: The Fed won’t step in just yet. Market stability depends on economic resilience.
4️⃣ Venture Capital and Risk Appetite Drying Up
Global venture funding slowed sharply in February, as public market uncertainty spills over into private investments.
VCs are being ultra-selective, focusing on AI, health tech, and robotics. Fewer exits = fewer big bets. The IPO market remains frozen.
Why this matters: A slowing VC market signals lower economic risk appetite and Startups face tougher funding conditions, leading to layoffs & slower innovation.
🔍 Bottom Line: A Market on Edge
Recession fears are growing, fueled by tariff uncertainty and Washington dysfunction. Volatility is at key levels—either a turning point or the start of deeper pain. The Fed is watching, but won’t act unless conditions worsen.
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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.
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