S&P 500 nears bear market as Trump's tariffs hammer stocks

Futures tied to the S&P 500 index slumped further on Monday and were down more than 20 per cent from their all-time highs, putting the most closely followed benchmark for US equities on track to confirm a bear market.

Dow Jones Industrial Average futures also sank 20 per cent below their record high, while the Nasdaq confirmed it was in a bear market last week as fears of a recession following US President Donald Trump's sweeping tariffs pound global stocks.

Trump said on Sunday that investors would have to take their "medicine" when he was asked about the market sell off, adding that he would not make a deal unless the trade deficit with China is solved.

An index confirms it has been in a bear market if it closes more than 20 per cent below its record closing high, according to a widely used definition.

The last time the S&P 500 confirmed it was in bear market territory was in June 2022 when investors were worried whether the Federal Reserve would be able to tame post-pandemic inflation without causing an economic downturn.

Bear markets often lead into a recession and last until investors think that the worst of the economic downturn is behind them. Nine of the 12 bear markets since 1948 have been accompanied by recessions, according to investment research firm CFRA.

The tariff mayhem has led Wall Street brokerages to raise their forecasts of a US recession, while traders have ramped up bets of interest rate cuts as Trump shows no sign of backing off after imposing sweeping tariffs on US imports.

"It looks like (Trump) wants to re-engineer the whole way that the US has been operating as the world's leading economy," said Giles Coghlan, director at trading platform GCFX.

"As long as that perspective is embraced by the market, then we'll have further selling."

The S&P 500 has fallen almost 11 per cent in the last two sessions, down more than 17 per cent from its all-time closing high of 6,144.15 points hit on February 19 as of Friday's close.

Futures indicated a more than 2 per cent decline on the index, pointing to another bout of losses that could push the S&P 500 over the bear market threshold.

Heavyweight tech firms, which powered Wall Street's main indexes to record highs in recent years, have been the worst hit so far. Apple has lost 25 per cent, while Nvidia is down 20 per cent this year. Microsoft has shed 14.6 per cent.

The information technology subindex has led losses among the major S&P sectors so far in 2025.