In a few short weeks, President Donald Trump has started silencing the buy-the-dip stock traders who set the tone on Wall Street for the better part of two decades.
In their place are growing calls to lock in profits and sit on the sidelines while Trump’s trade-war chaos upends the economic outlook — and casts uncertainty over who, if anyone, will emerge as the new era’s stock-market winners.
“Buying the dip now is like buying discounted tickets to a show without knowing who’s performing,” said Dave Mazza, chief executive officer of Roundhill Investments. “Unlike the recent path when buying every dip was reliable, the heightened uncertainty of tariffs and trade policy means investors could end up with either a blockbuster or a flop.”
The sentiment is a sign of just how much Trump has rattled Wall Street’s once prevalent bull-market faith by moving to roll back the globalization that’s powered the world economy for decades and slash the government spending that’s provided a steady jolt of stimulus at home.
But as much as the policies themselves has been the return of Trump’s style — a scattershot approach that’s resulting in a dizzying cycle of tariffs that are called on, off and on again. And that volatility has shattered confidence that any bounceback — like the one that lifted stock prices Wednesday — won’t reverse as quickly as it appeared.
“Uncertainty is probably here to stay for a while,” said Burns McKinney, managing director and senior portfolio manager at NFJ Investment Group.
That uncertainty has pulled down what had been one of the strongest US bull runs since the Internet bubble of the 1990s, one that was stoked by swelling corporate profits and speculation that America’s tech giants would lead the coming artificial-intelligence revolution. That drove the Nasdaq 100 Index to gains of 54% in 2023 and 25% last year.
Even with rising doubts about whether valuations had run up too far, that rally had supported a buy-the-dip mentality. Last year, until late July, the S&P 500 went 356 days without logging a 2% decline, the longest such winning streak since the Global Financial Crisis, according to Bloomberg Intelligence data.
Since mid-February, the S&P has charted a steep pullback from its record high and is on the threshold of a technical correction, meaning a drop of 10% or more from its recent peak.
Despite some attempts to snap up discounted stocks — like Wednesday’s 0.5% increase in the index after two down days — the S&P 500 hasn’t notched two consecutive days of gains since its February peak. Already, yesterday’s bounce is fading, with the S&P 500 and Nasdaq 100 both lower Thursday morning after Trump threatened tariffs on EU wine, champagne and other alcoholic beverages, dashing a slight rebound following solid economic data.
The technology-heavy Nasdaq 100 has similarly failed to see back-to-back up days since its record, and the gauge fell into correction territory in early March.
“Coming into the year, stocks looked overvalued by more than 10%,” said NFJ Investment Group’s McKinney. But, he added, “that doesn’t necessarily mean that suddenly we would just dive right in.”
No Capitulation Yet
That’s in part because market watchers say they don’t see some of the signs that generally indicate a meaningful rebound rally is in the works. That includes what’s know as capitulation — or an across the board selloff that shows sentiment has gotten far too negative and is poised to reverse.
In fact, data from Bank of America Corp. show that clients bought stocks for a sixth straight week through last week. Junk-bond spreads aren’t at alarmingly levels. And the so-called fear gauge — the Cboe Volatility Index — shows volatility is increasing but not at red-flag levels.
“We’re now in capital preservation” mode, said Ted Mortonson, managing director at Robert W Baird & Co., who said the market, and particularly the technology sector, is also facing some of the usual spring headwinds. He said anyone looking to swoop in now hasn’t “been through some very ugly cycles.”
The attitude, of course, is far from universal, and even the latest round of growth fears hasn’t done away with the generally bullish 2025 calls from Wall Street’s market forecasters. Citigroup Inc. strategist Scott Chronert, for one, says the recent pullback in the S&P 500 makes the risk-reward more compelling. And others are still seizing on the chance to hunt for some bargains.
“These are opportunities to buy really good stocks at much more attractive multiples, especially the tech names,” said Shana Sissel, chief investment officer at Banrion Capital Management.
Still, caution is always warranted for investors who are essentially attempting to time the market. While index corrections can be healthy cycles for stocks, sentiment can easily switch from cautious to fearful, setting up a much bigger market selloff.
“It’s hard to know when the bottom is,” said Tanvir Sandhu, chief global derivatives strategist at Bloomberg Intelligence. “Catching the falling knife is never a good thing.”
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