Stocks hold near 5,000 as tariff fears grip global markets

The Black Monday that never comes: chronicle of an announced crash

European and US stock markets face a turbulent week with tariffs in the background. The S&P 500 closed flat but above 5,000 points, yet market sentiment remains highly uncertain. The European Union has offered the United States a zero-for-zero tariff agreement, while China responded with its own measures. The result: extreme volatility and an open debate on whether this is a temporary correction or the start of something much worse.

S&P 500 closes flat and futures point to rebound

The US index held steady, ending the session above 5,000 points, a level many analysts watched as key support. European and Asian futures trade in green, cryptocurrencies remain flat, and Brent crude shows no sharp movements. European Commission President Ursula von der Leyen announced the EU is ready to negotiate with the US and offered a zero-for-zero tariff deal. This gesture, leaked minutes before the opening, was interpreted by some traders as the missing signal for a technical rebound.

However, uncertainty remains the dominant note. Former President Donald Trump retracted his promise to eliminate tariffs on electronics, mobile phones, and laptops, adding more noise to an already confusing scenario. Volatility gives no respite, and investors seek clues in every headline.

Why are tariffs putting markets in checkmate?

Antiestéticar of a global trade war drives the erratic movements of recent sessions. Tariffs not only make imported products more expensive but can trigger retaliations and affect companies operating in multiple countries. In this context, some US firms might be forced to restrict operations in certain markets, adding an extra layer of risk.

An example circulating among investors is T. Rowe Price. According to shared analysis, the company maintains stable net income since 2017, has short-term debt of $600 million, and operating cash flow of $1.6 billion. With market capitalization and enterprise value nearly identical, the stock has fallen to levels not seen since 2017. For some, this drop is unjustified and represents a buying opportunity. For others, it signals the market discounts greater deterioration.

Buy-the-dip strategy: opportunity or trap?

Some argue dips are the best time to enter. The logic is simple: if a company has solid fundamentals and its price crashes due to external factors, the market is giving away shares. Defenders of this strategy compare it to supermarket shopping: if a needed product is on sale, you buy more; if it drops again, you buy even more. Provided, of course, the company remains solvent and the product stays necessary.

Against this, the argument stands that not all drops are equal. In a global recession scenario, even the best companies may take years to recover their value. History shows prolonged crashes can last a decade or more, and those who buy cheap may get trapped watching prices continue to fall. The key lies in conviction and time horizon.

Defense spending and impact on European industry

Increased defense spending by several European countries has been a market driver in recent months. Greece, Denmark, UK, Sweden, Spain, Poland, and Netherlands announced budget increases in this area. This boosted sector companies but also raised sustainability doubts. Some analysts warn European industrial capacity cannot absorb all orders and part of that spending will end up with US and Israeli suppliers, like Lockheed Martin or Spike missiles.

The contradiction is evident: there is a desire to reduce dependence on the US in defense matters, yet weapons systems are still bought from American companies. Between 2022 and 2024, nearly 80% of European countries' defense purchases were made from the US and Israel. Far from being anecdotal, this data conditions any military autonomy strategy.

Impact on Americans' wallets

In the US, about 60% of the population has money invested in stocks. Many have increased exposure and reduced savings buffers. If tariffs persist and inflation rises, the Federal Reserve might be forced to raise interest rates, making credit more expensive and straining families further. In that scenario, many investors would have to sell parts of their portfolios to cover expenses, potentially accelerating declines.

The lingering question is whether the Federal Reserve will intervene to stop the bleeding. A 125 basis point rate cut would be a shock measure, but it's unclear if sufficient if recession materializes. Uncertainty is maximum, and markets seem to discount multiple scenarios at once.

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Monday dawns with green futures and a strange feeling: the tense calm of someone waiting for a blow that never quite arrives. Macroeconomic data does not help, geopolitical tensions persist, and investors navigate between antiestéticar and greed. History repeats itself, but never in the same way. Meanwhile, the S&P 500 clings to 5,000 points as if it were a burning nail.