The S&P 500 rebounded from weekly losses, but volatility looms as options expire and weak earnings weigh on sentiment. Analysts warn of continued uncertainty amid tariff risks, slowing growth, and aggressive retail buying.
The S&P 500 rebounded to erase this week’s losses, led by strong gains in megacap tech stocks including Tesla Inc., while Boeing Co. surged after securing a contract to build the U.S.’s next-generation fighter jet.
Despite the bounce, Wall Street remained on edge as underwhelming forecasts from FedEx Corp., Nike Inc., Micron Technology, and Lennar Corp. left traders cautious. Meanwhile, the Nasdaq 100 was on track for its longest weekly losing streak since 2022.
A key factor fueling the current market turbulence is the expiration of approximately $4.5 trillion in contracts tied to stocks, indexes, and exchange-traded funds — a phenomenon known to heighten volatility.
“We’re approaching today’s session with a particularly elevated degree of caution,” said Ian Lyngen of BMO Capital Markets.
Over the past month, trillions of dollars have been wiped off U.S. equity markets amid fears of an economic slowdown, renewed tariff threats, geopolitical risks, and stretched tech valuations. Dip-buying, a long-standing investment strategy, has largely failed to yield results in recent weeks.
Morgan Stanley strategist Michael Wilson predicted a “rolling recovery” rather than a quick rebound. “We think new highs are probably out of the question in the first half of this year,” Wilson told Bloomberg TV.
On the day, the S&P 500 slipped 0.2%, the Nasdaq 100 dropped 0.2%, and the Dow Jones Industrial Average hovered around flat. The 10-year Treasury yield ticked up to 4.25%, while the U.S. dollar gained 0.3%.
Systematic trend-following funds, also known as commodity trading advisers (CTAs), have turned net short on U.S. stocks for the first time in over a year. According to Goldman Sachs, CTA exposure to the S&P 500 is now at its lowest since 2023.
Still, retail investors poured over $12 billion into U.S. equities in the week ending March 19, according to JPMorgan Chase & Co. Analysts caution that this surge in retail buying could be a sign that the market hasn’t hit bottom yet.
Despite rising concern over U.S.–China tariffs ahead of the April 2 announcement, analysts at 22V Research believe that the current risk is less severe than in December. “While uncertainty will remain high, the overall tariff direction appears less aggressive,” noted Kim Wallace of 22V.
Bank of America’s Michael Hartnett echoed that sentiment, stating that “monster” capital inflows into global equities — along with recent rallies in Germany and China — suggest investors are discounting the likelihood of a deep trade-driven recession.