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Jessica Menton and Alexandra Semenova
6 min read
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(Bloomberg) — The US stock market is about to conclude its worst quarter compared to the rest of the world since the 1980s.
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Obviously there have been lots of dips along the way to this ignominious milestone, which also means investors should have some attractive entry points to start buying again. Much of Wall Street is wondering when it will be safe to dive in. But with so many factors up in the air, from trade wars to economic growth to geopolitical tensions, the consensus appears to be, “Not yet.”
“We’re mired in uncertainty,” said Mary Ann Bartels, chief investment strategist at Sanctuary Wealth. “We don’t have confidence that US stocks can significantly recover until we know what exactly the tariffs are and the subsequent impacts to corporate earnings.”
The S&P 500 Index (^GSPC) has shed 5.1% this year, trailing the MSCI All Country World Index excluding the US Index’s 6.5% gain. That’s the widest gap in any quarter since 1988, according to data compiled by Bloomberg.
The main problem is the rout in the big technology stocks that drove the recent two-year rally as investors were captivated by artificial intelligence euphoria. You can see it in trading patterns, where much of the market beyond big tech is holding up reasonably well, while the Magnificent Seven former darlings are crumbling. For example, the equal-weight version of the S&P 500 and the Dow Jones Industrial Average are performing better the regular S&P index this year, a combination that since early 1990 has only happened 26% of the time.
This is all coming to a head as traders rush into less risky positions in response to President Donald Trump’s trade plans and fears of slowing growth. The Trump administration says it will roll out broad-based reciprocal tariffs on Wednesday, stoking worries about an economic slowdown that eats into Corporate America’s profits and, in turn, dims the outlook for US stocks.
It’s a stunning reversal for investors to process. The S&P 500 entered 2025 coming off two consecutive years of 20% gains, the first time that’s happened this century. But the boom left positioning stretched, valuations pricey and the market vulnerable. With global risks suddenly amplified, traders are seeking safe areas to hide out, putting S&P 500 and the Nasdaq 100 Index on track for their worst quarters since 2022.
