- NASDAQ sinks 4% before shooting higher on tariff pause rumor.
- CNBC says the White House is unaware of the tariff pause rumor.
- S&P 500 sinks to January 2024 level.
- Bank of America cuts its year-end target for S&P 500 by 16%.
UPDATE: The White House denies that it is considering a 90-day pause on tariffs.
What is happening? It's hard to say.
Rumors emerged midway through Monday's US stock market sell-off that White House advisor Kevin Hassett had told reporters that US President Donald Trump was considering a 90-day pause on the rollout of the hefty tariffs announced last Wednesday.
The NASDAQ, which had plunged more than 4% in the morning session, suddenly shot up 1.8%. But that rally was short-lived.
CNBC then quickly announced that no one at the White House was aware of a 90-day tariff reprieve. The NASDAQ then reversed again, trading at -1.2% about one hour into the regular session.
The S&P 500 traded below 5,000 on Monday, reaching a 52-week low at 4,835, a level it hasn't seen since January 2024. Bank of America’s global research team revised its end-year target for the S&P 500 to 5,600 from 6,666, a 16% revision. However, the analysts were quick to add that they see a wide variety of possibilities.
"A floor of 4,000 on the S&P [500] would represent about a 35% decline, slightly worse than the typical recessionary decline of 30%," BofA wrote about their worst-case scenario.
Goldman Sachs raised its recession probability from 35% to 45%, citing a slowdown in economic growth. The bank cut its annual average GDP growth forecast from 1.5% to 1.3%. Goldman chief economist Jan Hatzius said the changing outlook was due to “a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty that is likely to depress capital spending by more than we had previously assumed.”
Morgan Stanley reduced its rating on Goldman Sachs (GS) stock based on the macro outlook, cutting the price target from $659 to $558. "Trade developments move our Base Case to a significant GDP slowdown, with risk of our bear case recession scenario rising sharply," wrote Morgan Stanley analysts Betsy Graseck and Ryan Kenny. In such a scenario, analysts predict that wealth management and investment banking fees will decline.
On Monday morning, several Asian stock markets saw their circuit breakers triggered in order to halt heavy selling. The halts hit the Japanese, Taiwanese and South Korean stock markets.
Wedbush Securities cut its price target on Tesla (TSLA) by about 40% and its price target on Apple (AAPL) by about 20%.
YTD Daily NASDAQ Composite (candlesticks) vs. S&P 500 (blue) vs. DJIA (purple)
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