1. El-Erian warns U.S. tariffs risk recession probability reaching 50%. 2. Inflation expectations have increased to 3.5%, impacting economic outlook. 3. Market response to tariffs underestimated, affecting growth and dollar value. 4. Potential Federal Reserve rate cuts may be limited or non-existent. 5. Economic structure is strong, but risks of recession are alarmingly high.
Increased recession risk and inflation expectations generally depress stock market performance. Similar anxieties previously led to downturns in the S&P 500 during tariff escalations.
Tariffs and recession fears significantly context the economic climate, directly influencing S&P 500 valuations. The heightened risk affects investor sentiment and thus market trajectories.
The immediate market reactions to inflation and tariff fears usually manifest within weeks. Historical patterns show swift impacts on stock prices amid economic uncertainties.