Waves of volatility shook markets anew, with stocks, bonds and commodities getting whipsawed by another deluge of headlines around President Donald Trump’s trade war that only reinforced the clouds hanging over the outlook for investing and the economy.

Traders looking for equities to bottom after a selloff of trillions of dollars were faced with a series of twists and turns on Monday. While the S&P 500 moved away from the threshold of a bear market, its bottom-to-top intraday reversal was the biggest since 2020 when Covid upended global trading. Treasuries weakened in a volatile session, with yields across all maturities higher by over 10 basis points — a stark turnaround from the plunge earlier in the day.

Trump said he wasn’t considering a pause on his plan to implement additional tariffs on dozens of countries despite outreach from trading partners eager to avoid the levies, while still signaling he could be open to some negotiations.

As markets wobbled, some Wall Street titans sounded the alarm. Bill Ackman said the US is “heading for a self-induced, economic nuclear winter.” Boaz Weinstein predicted the “avalanche has really just started.” And Jamie Dimon said it “may be disastrous in the long run.”

“For now, it looks like news out of Washington will continue to drive the market’s swings, one way or the other,” said Chris Larkin at E*Trade from Morgan Stanley. “The other side of the coin is that some of the market’s notable lows over the past few decades have been preceded by similar levels of volatility, although it’s always impossible to know when prices will eventually find their bottom.”

To Matt Maley at Miller Tabak, those looking for a V-shaped recovery in the stock market will likely be very disappointed.

“We should see a strong bounce at some point soon, but the process of repricing the market to its realistic economic outlook will take time,” Maley said. “There will be plenty of time to get aggressive when it becomes more evident that the worst of the decline is behind us.”

HSBC strategist Max Kettner is making the case for a “very short-term bounce” in stock markets, with the Magnificent Seven possibly benefiting the most. However, any rebound will only set the stage for another leg lower, he warns. To Morgan Stanley’s Michael Wilson, investors should be prepared for the S&P 500 to drop further if tariff angst doesn’t subside.

“Many metrics are at panic levels associated with meaningful bottoms over the past 40 years,” said Jonathan Krinsky at BTIG. “The issue is when you get into the capitulation zone, markets often move beyond what many think is likely or possible.”

Consider the move in Wall Street’s measure of equity swings. The VIX pushed away from the 60 level hit earlier Monday, but the futures curve is signaling that volatility may remain elevated for months — creating a challenging environment.

Major selloffs have typically reached their culmination amid a level of fear and loathing that hasn’t been yet been hit, at least as measured by the VIX.

The index topped out at nearly 66 in August during the market rout sparked by the unwind of the Japanese yen carry trade and recession jitters, and it hit 85 in the 2020 selloff fueled by the Covid pandemic. In 2008, it rocketed to just short of 90 as worries over the great financial crisis hammered stocks.

“You’ll hear all sorts of opinions as to when and where the market will bottom out, but they’re all guesses,” Bespoke Investment Group strategists noted. “No one knows at this point.”

One silver lining is that the so-called smart money might be getting close to a tactical bottom.

Hedge funds increased short positions across a range of US macro products by 22% last week, marking the largest jump in more than a decade, wrote Vincent Lin at Goldman Sachs Group Inc.

What lingers as a big risk, though, is that the retail crowd has yet to sell US equities meaningfully, presenting an additional risk to the stock market.

“The swift and sudden stock market decline is a repricing to reflect an impending recession from the burden of tariffs,” said Richard Saperstein at Treasury Partners. “Markets won’t rebound until tariffs are negotiated and reduced, until valuations move even lower to very compelling levels, and until fundamentals improve, and none of these factors are in the cards at this time.”

The slump in equities has taken US equity valuations to the lowest level since late 2023.

But to Larry Tentarelli at the Blue Chip Daily Trend Report, investors should maintain defensive positioning, above average cash levels, and reduced if any new buying until volatility comes down.

“Market direction will be based on the tariff news cycle to start the week,” he said. “If there is a material, positive change in the news cycle, markets could benefit. Until then, continue to expect very wide trading ranges.”

Wall Street forecasters are racing to temper their views on US equities as Trump’s sweeping tariffs threaten to upend the global economy.

JPMorgan Chase & Co.’s Dubravko Lakos-Bujas slashed his year-end forecast for the S&P 500 to 5,200 from 6,500 previously. Oppenheimer & Co.’s John Stoltzfus — the biggest bull among strategists until March — cut his outlook to 5,950 points from 7,100. Strategists at Evercore ISI, Goldman Sachs Group Inc. and Societe Generale SA have also reduced targets in recent days.

In a note to clients Monday, Stoltzfus said uncertainty was “at levels investors find hard to embrace.” This is being combined with “a negative pitch book that seemingly projects negative outcomes to infinity.”

“Our base case is that after an initial phase in which tariffs could rise further, US effective tariff rates should start to come down from 3Q,” said Solita Marcelli at UBS Global Wealth Management. We also expect the Fed to cut interest rates by 75-100 basis points to support the economy. In this scenario, we believe the S&P 500 can recover to 5,800 by year-end.

A brutal global selloff in financial markets triggered by Trump’s burgeoning trade war raised speculation on Monday the Federal Reserve may intervene to stem the losses. Don’t count on it, several Fed watchers said.

With inflation still running above the US central bank’s target and levy-induced price hikes on the horizon, economists and market analysts said they believe Fed officials will wait for the impact to hit the real economy before they lower interest rates. That could take months to show up in official data.

“If we don’t get a recession, it’s going to be hard for the Fed to look through this inflation in the short run,” Michael Gapen, chief US economist for Morgan Stanley said Monday on Bloomberg TV. “The Fed’s going to be on hold for the foreseeable future.”

Some of the main moves in markets:

Stocks

—The S&P 500 fell 0.2% as of 4 p.m. New York time

—The Nasdaq 100 rose 0.2%

—The Dow Jones Industrial Average fell 0.9%

—The MSCI World Index fell 1.8%

Currencies

—The Bloomberg Dollar Spot Index rose 0.6%

—The euro fell 0.4% to $1.0914

—The British pound fell 1.4% to $1.2712

—The Japanese yen fell 0.8% to 148.09 per dollar

Cryptocurrencies

—Bitcoin fell 0.8% to $78,160.98

—Ether fell 1.8% to $1,546.16

Bonds

—The yield on 10-year Treasuries advanced 22 basis points to 4.22%

—Germany’s 10-year yield advanced three basis points to 2.61%

—Britain’s 10-year yield advanced 17 basis points to 4.61%

Commodities

—West Texas Intermediate crude fell 1.6% to $60.99 a barrel

—Spot gold fell 2.2% to $2,970.77 an ounce

(With assistance from Robert Brand, Julien Ponthus, Anand Krishnamoorthy and Richard Henderson.)

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