2018 vs. 2025: If It’s Just About Tariffs, Is S&P 500's Drop Enough?

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Tiger_comments
04-16

In 2018, US stock market suffered its worst performance in a decade. The Dow fell 5.6% for the year, the S&P 500 dropped 6.2%, and the Nasdaq slid 4%.

2018 vs. 2025: Has the S&P 500 Fallen Enough?

As of April 7, 2025, the YTD drop in $S&P 500(.SPX)$ has already exceeded the lowest point of December 2018. Meanwhile, headlines suggest that China is seeking renewed dialogue with the US.

If history is repeating itself, there are two possible paths forward:

  1. Another sharp drop ahead? Just like the late-2018 capitulation before a V-shaped rebound.

  2. Have we already bottomed? However, in terms of the decline degree, the drop on April 7 has already exceeded the 2018 levels. If the dialogue resumes, the market has the possibility of rebounding immediately.

However, 2025 is more complicated.

Recession risks are still hanging over the market.

Even after the recent correction, S&P 500’s forward P/E ratio remains elevated at 19.58—above the 80th percentile of the past 20 years. In contrast, 2018’s forward P/E never exceeded 19 and fell as low as 16.39 during the December drop.

Tiger analysts warn:

Markets are still pricing in +10% EPS growth for 2025. That means recession risk isn’t fully reflected in current valuations.

According to multiple research institutions, each 1% increase in effective tariffs could add about 0.1% to inflation and reduce real GDP by roughly 0.05–0.1%. If real GDP growth slips below 1%, a short-term recession becomes very likely.

How do you view the current market trend?

  • Could a breakthrough in US-China talks mark a bottom for 2025 in the first half of the year?

  • Will tariffs really tip the economy into recession?

  • And if there’s a second wave of selling—when might it hit?

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Comment（22）

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  • Shyon
    ·04-16
    TOP
    I believe the current correction is more complicated than what we saw in 2018. While the S&P 500’s recent drop has already surpassed 2018’s levels, today’s backdrop includes elevated valuations, lingering recession risks, and tariff uncertainty. Unlike 2018, a clear rebound catalyst like a Fed pivot hasn’t emerged yet.

    A breakthrough in US-China talks could provide a short-term boost, especially if it helps cool inflation and support growth. But with markets still pricing in optimistic earnings expectations, I wouldn’t rule out a second wave of selling — particularly if economic data softens or guidance gets revised down.

    That said, I don’t expect a deep crash. If GDP stays above recession territory and inflation stabilizes, a second dip could set up a double bottom. I’m watching closely, as trade developments might be the key to turning sentiment in the first half of 2025.

    @Tiger_comments @TigerStars

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  • icycrystal
    ·04-16
    TOP
    @LMSunshine @koolgal @Shyon @Aqa @Universe宇宙 @rL @HelenJanet @SPACE ROCKET @GoodLife99 @TigerGPT

    gosh [OMG] [OMG] [OMG] is it that bad [Gosh] [Gosh] [Gosh] is it true [Doubt] [Doubt] [Doubt] [Helpless] [Helpless] [Helpless]

    2018, US stock market suffered its worst performance in a decade. The Dow fell 5.6% for the year, the S&P 500 dropped 6.2%, and the Nasdaq slid 4%.

    April 7, 2025, the YTD drop in $S&P 500(.SPX)$ has already exceeded the lowest point of December 2018.

    How do you view the current market trend?

    Could a breakthrough in US-China talks mark a bottom for 2025 in the first half of the year?


    Will tariffs really tip the economy into recession?


    And if there’s a second wave of selling—when might it hit?

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  • MHh
    ·04-16
    TOP
    Anything is possible. The main players—US and China can trigger both a recession as well as a rebound. It is all about whether they can reconcile their difference and prevent a trade war. I think both sides won’t want a recession but both always want the best interests for themselves. Let’s hope they can compromise a little. I still believe trump will try to prevent a recession and we might see some good news soon. However, I also believe after this brief respite, there will be another round of selling as traders take profit and both the US and China will definitely have other issues of tension again by the end of this year that will spark off the next sell off. This random dipping and rebounding will be more frequent this year and with greater degree than the past year. @SPOT_ON @rL @Kaixiang @DiAngel @Fenger1188 @HelenJanet @Success88 @Wayneqq @Universe宇宙 come join
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  • koolgal
    ·04-16
    Tariffs act as a tax on imported goods, making them more expensive.  This increased cost can reduce consumer purchasing power, possibly leading to companies cutting back on investment and even reducing its workforce leading to higher levels of unemployment.

    Donald Trump's tough tariffs may trigger retaliatory measures and cause a ripple effect where global supply chains are disrupted, trade volumes decline and business confidence takes a big hit.  The global economy faces a double whammy - higher costs domestically with lower demand and reduced exports internationally.

    This may trigger a  recession.

    Investing in a Bear Market calls  for a thoughtful disciplined approach on capital preservation, quality assets and to seek out opportunities to buy stocks that are on sale. 

    Let's hope that US & China can resolve the tariffs issue soon, the consequences of not doing so can result in severe economic strife.

    @Tiger_comments @TigerStars @Tiger_SG @CaptainTiger




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  • TimothyX
    ·04-16
    市場仍在消化每股收益增長+10%2025年。這意味着經濟衰退風險並未完全反映在當前估值中。

    據多家研究機構預測，每增加1%有效關稅可以添加關於通貨膨脹率爲0.1%並減少實際GDP大致按0.05–0.1%.如果實際GDP增長下滑至1%以下，短期經濟衰退就變得非常有可能。

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  • Chong Keat
    ·04-21
    It is hard to predict, just based on the history data. The environment and trend of the year 2018 is different from 2025. we never know how the market reacts to current circumstances.
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  • Chong Keat
    ·04-21
    It is hard to predict, just based on the history data. The environment and trend of the year 2018 is different from 2025. we never know how the market reacts to current circumstances.
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  • Aqa
    ·04-16
    The current market fear index remains at its lowest. The effect of the tariffs war is still rippling through out the markets. Markets will continue to be jittery until the final tariff outcomes. Compare to 2018, 2025 is more complicated and recession risks are still hanging over the market. Anything can happen… Thanks @Tiger_comments @icycrystal
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  • Cadi Poon
    ·04-16
    如果歷史重演，有兩條可能的前進道路：

    前方又一次大幅下跌？就像2018年末V型反彈前的投降一樣。

    我們已經觸底了嗎？但從下跌程度上看，4月7日的跌幅早已超過2018年的水平。如果對話恢復，市場有立即反彈的可能。

    然而，2025年更加複雜。

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  • highhand
    ·04-16
    I'm expecting another lower low...then that's enough for me to buy in. after that, some deal will be made and stock market rally to the moon..
    [Happy]
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  • 1PC
    ·04-16
    From the S&P500 weekly chart 📉📈, if the Low 4835.04 is taken out, this will trigger a potential Next Selling wave 🌊.  Prior to this, I will view that the market will be Super Choppy & Ranging [Sweats] [Sweats] [Sweats]. But there's always short term Opportunities with these ranging movements  Stay Nimble & Keep Cash 💰 A Big Game changer will definitely be the Breakthrough of the US -China talks But there's no sign of this happening soonest 😞
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  • ECLC
    ·04-16
    With tariff tensions and on-going trade wars still playing out, it is possible for double bottom of S&P 500. Waiting to buy on sharp drops.
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  • WanEH
    ·04-17
    I don't think will have economy recession. but definitely it will cause the high inflation in global.
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  • SPACE ROCKET
    ·04-16
    Not sure. But I've set aside cash to buy SPY at $470-$480.
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  • TheStrategist
    ·04-16
    The mortgage crisis vs this tariff crap is definitely incomparable. This was engineered to drop the markets
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  • Universe宇宙
    ·04-16
    @TigerGPT market prepare for "sell in may"?
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  • Universe宇宙
    ·04-17
    @TigerGPT Sell in May and Go Away?
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