Trump shakes the faith in the US stock market bull market! Under the shadow of the trade war, the call for "bottom fishing" on Wall Street is gradually weakening

According to the Zhitong Finance APP, in just a few weeks, U.S. President Trump has begun to silence the "buying the dip" traders who have dominated Wall Street for the past two decades. Instead, there are increasing calls to lock in profits and remain on the sidelines, as Trump's chaotic trade war is disrupting the economic outlook and casting uncertainty over who will emerge as the winners in the new era of the stock market. "Buying the dip now is like buying discounted tickets without knowing who the performer is," said Dave Mazza, CEO of Roundhill Investments. "Unlike the recent reliability of buying the dip, the high uncertainty surrounding tariffs and trade policies means that investors could ultimately succeed greatly or fail miserably." This sentiment indicates that Trump, by attempting to reverse the globalization process that has driven the global economy for decades and cutting government spending that provides stable domestic stimulus, has shaken the once-prevailing bull market faith on Wall Street. However, equally important as the policies themselves is the return of Trump's style—a piecemeal approach that leads to a dizzying cycle of tariffs that are sometimes implemented, sometimes canceled, and sometimes reinstated. This volatility crushes confidence that any rebound (like the one that boosted stock prices on Wednesday) won't reverse as quickly as it appeared. Burns McKinney, Managing Director and Senior Portfolio Manager at NFJ Investment Group, stated, "The uncertainty may persist for a while." This uncertainty has weighed down one of the strongest bull markets in the U.S. since the internet bubble of the 1990s. This bull market was driven by corporate profit growth and speculation that U.S. tech giants would lead the upcoming artificial intelligence (AI) revolution. This led to a 54% rise in the Nasdaq 100 index in 2023, following a 25% increase last year. Despite growing doubts about whether valuations are too high, this momentum had supported the buying-the-dip mentality. According to statistics, until late July last year, the S&P 500 index had gone 356 days without a 2% drop, the longest winning streak since the global financial crisis. However, since mid-February, the S&P 500 index has significantly retreated from its all-time high and is nearing the threshold for a technical correction, which is a drop of 10% or more from recent highs. Although there are still attempts to scoop up undervalued stocks—such as the index rising 0.5% on Wednesday after two days of decline—the S&P 500 index has not seen two consecutive days of gains since its February peak. Moreover, this rebound is already fading. The tech-heavy Nasdaq 100 index has also failed to rise for two consecutive days since its record high and entered a correction zone in early March. McKinney from NFJ Investment Group noted, "Entering this year, stocks looked overvalued by more than 10%." However, he added, "That doesn't necessarily mean we will suddenly jump in directly." No Surrender Selling Has Emerged Yet Part of the reason is that market observers indicate they have not seen signs that typically suggest a meaningful rebound is brewing. This includes the so-called "surrender selling" — a broad sell-off that indicates sentiment has become overly negative and is ready to reverse. In fact, data from Bank of America shows that as of last week, clients have been buying stocks for six consecutive weeks. The junk bond spread has not reached concerning levels. The so-called "fear index" VIX shows that volatility is increasing, but has not yet reached dangerous levels. Ted Mortonson, Managing Director at Robert W Baird & Co., stated, "We are now in a capital preservation mode." He noted that the market, particularly the tech sector, is also facing some common spring headwinds. He pointed out that anyone still looking to enter the market has not "experienced some very bad cycles." Of course, this attitude is far from universal, and even the recent round of growth concerns has not diminished Wall Street forecasters' generally bullish outlook for 2025. For example, Citigroup strategist Scott Chronert stated that the recent pullback in the S&P 500 has made the risk-reward more attractive. Others are seizing the opportunity to look for "bargains." Shana Sissel, Chief Investment Officer at Banrion Capital Management, said, "These are opportunities to buy truly quality stocks at more attractive valuations, especially tech stocks." Nevertheless, caution is always necessary for investors trying to time the market. While index pullbacks can be a healthy cycle for stocks, sentiment can easily shift from caution to fear, leading to larger market sell-offs. Tanvir Sandhu, Chief Global Derivatives Strategist at Bloomberg Intelligence, stated, "It's hard to know when to hit the bottom. Catching a falling knife is never a good thing."