Stan Choe and Alex Veiga, Associated Press
NEW YORK (AP) – Wall Street could soon be on the claws of another bear market as it fears that the Trump administration’s tariff blitz fuel will sink the global economy by taxes added to imports from around the world.
The last bear market happened in 2022, but this decline feels like a sudden turbulent bear market in 2020.
There are some general questions about the bear market:
Why is it called the bear market?
Bare Market is a term used by Wall Street when indexes such as the S&P 500 and the Dow Jones Industrial Average have dropped by more than 20% from their recent highs.
Why use bears to refer to market slumps? They represent a retreating stock market as they bearing hibernation. By contrast, Wall Street’s nickname for the surge in markets is bull market as the Bulls accused.
Wall Street’s main health barometer, the S&P 500, fell 1.2% in Monday afternoon trading. It is currently 18.4% below the all-time high set on February 19th.
Dow Industrials fell by 1.8%, while Nasdaq composite, which is already in the bear market, fell by 0.9%.
The S&P 500’s latest Bear Market was held in 2022 from January 3rd to October 12th.
Are you worried about investors?
The trade war has driven Wall Street fears and uncertainty about how businesses and consumers respond.
President Donald Trump continued on the tariff threat last week by increasing the 10% baseline tax on imports from all countries and higher tariff rates in dozens of countries operating the US trade surplus.
The global market acquired a crater the next day, and sales deepened after China announced it would retaliate with tariffs equal to US tariffs
Taxes are taxes paid by importers, often passed on to consumers and inflation pressure, causing some economic pain. They can also induce trading partners to retaliate and hurt all the economies involved.
Import taxes can cause economic damage by complicating decisions that companies need to make, such as which suppliers to use, where to find the factory, and the price they charge. And that uncertainty could delay or cancel investments that help drive economic growth.
Tariffs come when the US economy is already showing signs of slowing down. The market is also worried that tariffs could drive inflation, and has been rising recently.
How long will the bear market last and how deep will it be?
On average, the bear market took 13 months from peak to trough since World War II, 27 months and 27 months. The S&P 500 index fell by an average of 33% during the Bare Market at the time. The biggest drop since 1945 occurred at the Bear Market in 2007-2009, when the S&P 500 fell 57%.
History shows that the faster the index enters the bear market, the shallower tendency. Historically, the stock took 251 days (8.3 months) and fell into the bear market. If the S&P 500 had a 20% reduction in faster clips, the index lost an average of 28%.
The longest bear market lasted for 61 months and ended in March 1942. We reduced the index by 60%.
When did the bear market end?
Generally, investors want a 20% profit from a low point for at least six months. It took less than three weeks for the stock to rise 20% in March 2020.
Should investors sell now?
If you need money now or want to lock down your losses, yes. Otherwise, many advisors suggest that you overcome the ups and downs while remembering that the swing is a stronger return admission price that has been offered over the long term.
Dumping inventory will stop bleeding, but it also hinders potential profits. Many of the best days on Wall Street occurred during or shortly after it was over. This includes two separate days in the mid-2007-2009 bare market, when the S&P 500 surged by about 11%, with a leap of over 9% between the 2020 bare market.
The advisor suggests putting money in the stock only if it is not needed for several years. The S&P 500 has returned from all of the previous Bear markets and ultimately rose to an all-time high.
A decade of stock markets following the 2000 dot-com bubble burst was an infamous and cruel stretch, but the stocks managed to regain highs within a few years.
Veiga was reported from Los Angeles.
Original issue: April 7, 2025, 4:13pm EDT
