Tariff storm severely hits the U.S. stock market: is it a buying the dip opportunity or a risk trap?

As the tariff war escalates and severely impacts stock markets around the world, S&P 500 futures experience a big dump of 22%. Investor panic surges, and the market seems to have returned to the financial crisis of March 2020. Crypto Assets and safe-haven assets like gold are also affected, leading to a comprehensive dumping situation that leaves investors in a dilemma: "Is this a crisis or an opportunity?"

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The S&P plummeted over a thousand points, and the US stock market fell into a 32-day collapse quagmire.

Financial media Kobeissi Letter pointed out that since the S&P 500 index reached a high of 6147 points a few months ago, the US stock market has been declining for nearly 32 trading days, with a total drop of over 1,300 points, indicating that this is the most severe crash since 2020.

The decline over the past three trading days has reached as high as 15%, indicating that investor confidence is severely weakened.

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Trump's market comments triggered panic: sometimes you have to take some medicine.

Originally, the market anticipated positive news regarding the US-China trade agreement over the weekend, but instead, it received a completely different response. US President Trump not only failed to calm the market, but instead reinforced his hardline stance, stating in response to the market collapse: "Sometimes you have to take some medicine."

As soon as the news broke, US stock index futures fell 6% at the open, further deepening concerns about a prolonged recession.

Have safe-haven assets hedged? Bitcoin and gold have collapsed simultaneously.

This morning, the market value of Crypto Assets evaporated by 200 billion dollars within five hours, and the price of gold also fell below the 3,000 dollars per ounce mark.

This wave of comprehensive dumping shows that market confidence has completely collapsed, and investors are choosing cash as the only safe haven, while hedging tools remain ineffective in the financial storm.

(The market value of gold hits a new high of 20 trillion USD, is US Treasury increasingly distant from "safe haven"?)

AAII pessimism is spreading, with a low number of participants.

At the same time, according to the AAII sentiment survey, only 21.8% of investors are bullish, marking the third lowest point in history, second only to the market crash periods of 1990 and 2009, symbolizing a pessimistic attitude among investors.

With the VIX volatility soaring past last August's high, it shows that the market is in a state of extreme unease and the crisis is expanding.

Retail investors and institutions are retreating, leading to a mass exodus of funds from the US stock market.

Last Friday morning, within 2.5 hours, retail investors sold off 1.5 billion dollars worth of stocks, setting a historical record for a single period. At the same time, institutional funds also stopped propping up the market, with March 2025 being viewed as the month with the most intense capital outflow in recent years.

Currently, a large amount of capital is on the sidelines, seemingly paving the way for a rebound in the future market.

Is a "relief rebound" coming after the panic?

Despite the frequent bad news in the market, the Kobeissi Letter believes that the recent negative news has largely been reflected in stock prices. If there is positive progress in the trade agreement, the market is expected to see a rebound of over 5%:

A "healthy" market collapse requires a "relief rebound" to sustain its development, especially in the current situation where short-selling has become overly crowded, but this does not mean the market has reached a true bottom.

In summary, the future market fate still depends on whether Trump's tariff policy will continue. If the policy remains tough, the economy may fall into a deep recession; if it can pivot, then the current moment might be an excellent entry point, as potential opportunities always appear during times of neglect.

This article "Tariff Storm Hits U.S. Stock Market Hard: Is it a Bottom-Fishing Opportunity or a Risk Trap?" first appeared on Chain News ABMedia.