S&P 500 slips, but losses kept in check as Nvidia climbs ahead of results
Investing.com -- Economists at UBS, the Swiss multinational investment bank, said yesterday that United States could enter ’a meaningful recession’, followed by more stock market losses if current tariff rates are not reduced within the next three to six months.
The bank warned that a failure to actively decrease tariffs could lead to a negative economic scenario. The S&P 500 plunged over 10% across two straight sessions to end the week.
"Uncertainty could be exacerbated if “maximum pressure” strategies extend into foreign policy (Iran and Ukraine-Russia) and fiscal policy (extension of U.S. tax cuts)," Solita Marcelli, Chief Investment Officer Americas at UBS Global Wealth Management, said in a note.
UBS’s base case for the next three to six months predicts that the effective tariff rate will gradually decrease due to increasing economic, political, and business pressures. However, this is expected to result in a period of slower U.S. and global growth, as well as prolonged market volatility.
The VIX index—widely known as Wall Street’s “fear gauge”— printed the second-highest level since pandemic on Friday after China imposed retaliatory tariffs on the U.S.
Earlier this week, UBS lowered its S&P 500 price target and downgraded U.S. equities to Neutral from Attractive. The bank also downgraded the U.S. technology sector.
Despite severe stock market losses, the White House issued a press release on Friday afternoon praising President Donald Trump’s economic policies. The release arrived shortly after U.S. markets closed deeply in the red, marking the first time the Dow Jones Industrial Average declined by 1,500 points on consecutive days.
The White House press release highlighted the Trump administration’s immigration initiatives, including a substantial decrease in illegal border crossings into the U.S. and a series of arrests of suspected gang members.
The administration also touted President Trump’s plan for reciprocal trade aimed at reversing the effects of decades of globalization, which, according to the press release, has negatively impacted the country’s industrial base.