Market volatility and growing concerns
The US stock market continues to experience turmoil, driven by uncertainty surrounding Donald Trump's stance on import tariffs. Investors are eagerly awaiting the Federal Reserve's meeting next week, hoping to catch hints about potential rate cuts that could help stabilize markets, which are currently going through one of their toughest periods this year.
Stock decline: billions at stake
The recent market sell-off has reached a critical level: on Thursday, the S&P 500 (.SPX) officially entered correction territory, having lost over 10% from its record high on February 19. Despite a sharp rebound on Friday, the market lost more than $4 trillion in capitalization over the week. The hardest-hit stocks included major corporations like Nvidia (NVDA.O) and Tesla (TSLA.O), both of which saw substantial declines.
Fed meeting: what are markets anticipating?
Amid growing fears of an economic slowdown, investors are closely monitoring Fed's policy moves. Trump's escalating trade war has only added to the uncertainty, making the US central bank's decision-making process even more crucial.
Analysts widely expect the Fed to leave its benchmark interest rate unchanged at Wednesday's meeting. However, the focus will be on the Fed's message—investors are anticipating hints about possible rate cuts later this year. Any dovish signals could play a key role in restoring confidence on Wall Street and preventing a further market downturn.
The situation remains tense, with uncertainty surrounding both tariff policies and monetary decisions forcing investors to proceed with caution. The coming weeks will reveal whether the Fed can find a way to restore market stability.
Inflation slows, but Fed remains cautious on rate cuts
The latest consumer price data has provided some relief to markets, as inflationary pressures have eased, fueling hopes for lower interest rates. However, despite the slowdown in inflation compared to 2022, when the Fed launched its aggressive monetary tightening cycle, inflation remains above the 2% target.
At the same time, recent weak macroeconomic indicators could play a decisive role in shaping the Fed's future policy agenda. If economic data continues to disappoint, the central bank will have more reasons to ease policy further.
Markets expect dovish message from Fed
Investors are already pricing in sharp rate cuts. Fed fund futures currently project a total cut of around 75 basis points throughout 2025. With the current federal funds rate sitting at 4.25%–4.5%, markets are betting that the Fed will be forced to ease monetary policy amid worsening macroeconomic conditions.
All eyes will be on Fed Chair Jerome Powell's post-meeting remarks, as his tone and guidance will provide markets with a clearer picture of the central bank's next steps and the outlook for the US economy.
Wall Street fears are growing
While investors are hoping for rate cuts, some of the leading analysts have become more cautious in their forecasts. Major financial institutions are revising their forecasts for the US stock market.
Goldman Sachs has lowered its year-end 2025 target for the S&P 500 from 6,500 to 6,200 points, while Yardeni Research has adjusted its optimistic projection from 7,000 to 6,400 points. Meanwhile, the S&P 500 closed at 5,638.94 on Friday.
These downward revisions reflect growing concerns about an economic slowdown and potential pressure on corporate earnings. In the coming months, market movements will depend on Fed policy decisions, geopolitical developments, and the trajectory of inflation.
Market turmoil: volatility hits highest level since August
Stock markets continue to trade under extreme volatility, with the Cboe Volatility Index (.VIX) surging to its highest levels since August earlier this week before pulling back slightly. Investors are unnerved due to an obscure economic outlook and ongoing trade policy concerns.
Trade wars return: tariffs may hit companies and consumers
Next week, investors will certainly keep track of the news about the ongoing trade conflict. Analysts warn that new tariffs could harm corporate earnings and drive up consumer prices.
The latest escalation came after Donald Trump announced on Thursday that he was considering a 200% tariff on European wines and alcoholic beverages. This move was a response to the European Commission's decision a day earlier to impose retaliatory tariffs on $28 billion worth of US goods. The EU's move was prompted by existing US tariffs on steel and aluminum imports.
Is Fed taking backseat? Politics takes center stage
In recent years, the Federal Reserve has played a key role in shaping market sentiment, but now, geopolitical and trade issues are becoming increasingly dominant factors.
According to Nathan Toft, Chief Investment Officer at Manulife Investment Management, the coming months will be accompanied by political risks, which could weigh on financial markets.
Gold holds firm around $3,000 per troy ounce
Amid the escalating trade war and rising geopolitical tensions, investors continue to seek refuge in precious metals.
On Monday, gold prices remained just below the historic $3,000 per ounce level, which was briefly surpassed late last week.
As of 07:15 GMT, spot gold rose by 0.1% to $2,988.68 per ounce. On Friday, gold broke the $3,000 landmark for the first time in history, reaching a record $3,004.86 per ounce.
With markets remaining highly volatile, investors are closely monitoring developments, trying to anticipate the next trigger for the global economy.
Imprint from trade war: consumer sentiment worsens
Concerns that Trump's aggressive tariff policies could fuel inflation and hurt economic growth are once again in the spotlight.
Recent data revealed that consumer sentiment in March fell to its lowest level in two and a half years. At the same time, inflation expectations are rising, reinforcing analysts' fears that higher import prices could pressure the economy and weaken consumer purchasing power.
Recession: inevitable or just temporary correction?
While Wall Street debates the risks of an economic slowdown, US Treasury Secretary Scott Bessent made an ambiguous statement, suggesting that a full-blown recession is not guaranteed, though an economic slowdown remains possible. His remarks leave room for interpretation, highlighting the uncertainty surrounding the future course of the economy.
Gold rally: another bullish leg?
Despite economic turbulence, precious metals assert their strength. Gold, which is commonly viewed as a safe-haven asset during times of turbulence, has already gained around 14% since the beginning of 2025.
Technical analysts note that the short-term trend remains bullish, with key resistance levels at $3,016 and $3,030 per ounce. Given the persistent macroeconomic risks, investors are increasingly turning to gold as a hedge against inflation.
All eyes on Fed's pivotal policy meeting on Wednesday
The Federal Reserve's upcoming meeting on Wednesday is now the central focus for markets. The key question is whether the Fed will maintain its current stance or hint at potential rate cuts in the near future. Inflation projections in the updated dot plot and the press conference of Fed Chair Jerome Powell will be crucial. If Powell expresses concerns about the economic impact of tariffs, it could serve as a catalyst for further gains in gold prices.
Other metals also on the rise
The anticipation of the Fed's decision is not only driving gold prices higher—other precious metals are also rallying:
- Spot silver rose 0.1% to $33.81 per ounce.
- Platinum gained 0.4%, trading at $997.04 per ounce.
- Palladium climbed 0.4% to $969.22 per ounce.
These movements reflect a strong demand for safe-haven assets, confirming the high level of uncertainty in the global economy. In the coming days, investors will continue watching closely as events unfold, shaping the future trajectory of financial markets.
