Markets Struggle to Recover After Steep Sell-Off

Wall Street’s comeback attempt fizzles as investor fears grow

February 25, 2025

Dear Reader,

After last week’s brutal market decline where the Dow plummeted 700 points for its worst day of the year investors had hoped for a rebound. But Monday’s session showed the sell off isn’t over yet. The S&P 500 dropped another 0.5%, while the Nasdaq slid 1.2% into negative territory for 2025.

What’s fueling this extended volatility? The same concerns that triggered last week’s sell off , economic uncertainty, trade war tensions, and inflation fears, are still gripping the market.

Markets Are Struggling to Stabilize

After such a sharp drop on Friday, many expected bargain hunters to jump in, helping to recover some losses. Instead, investors stayed cautious, sending tech stocks evenlower and signaling that confidence remains shaky.

  • Tech Weakness: Leading the decline was Palantir, dropping 10.5%, and Microsoft, which slipped 1% after analysts warned that spending on AI infrastructure may slow.

  • Chipmaker Pressure: Nvidia, a major player in the AI boom, lost 3% as traders braced for its earnings report on Wednesday.

  • Trade War Fears: President Trump reaffirmed his tariff plans, saying that duties on Mexico and Canada will move forward next week after the temporary pause expires, raising concerns about potential supply chain disruptions and economic slowdowns.

Investors Are Watching for Key Economic Signals

Following last week’s disappointing data, consumer sentiment dropping almost 10% and U.S. services activity contracting, markets are bracing for more economic updates that could change investor confidence.

  • Retail Earnings on Deck: Reports from Home Depot (Tuesday) and Lowe’s (Wednesday) will shed light on consumer spending habits amid economic uncertainty.

  • Nvidia’s Earnings: As one of the biggest market movers, Nvidia’s Wednesday report could dictate whether AI stocks continue their dominance or pull back.

  • Inflation Watch: On Friday, the Federal Reserve’s preferred inflation gauge, the PCE price index will be released. If it comes in hot, it could reinforce concerns that the Fed may hold off on rate cuts for longer than expected.

So What Comes Next?

Markets could see more turbulence in the days ahead, as investors question whether the recent drop is just a temporary pullback, or the start of a deeper correction.

Whatever it may be, we’ll keep you posted

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