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Wall Street has been on a wild ride in recent weeks, witnessing the wipeout of a staggering $3.5 trillion from the market capitalization in 14 days. According to CompaniesMarketCap data, the total market capitalization of U.S. stocks plunged from $62.2 trillion as of Feb. 19 to $58.7 trillion as of March 7. The loss amount is greater than the GDP of the United Kingdom and roughly equal to Apple’s market value or the combined worth of Meta, Tesla and Netflix.
The S&P 500 wrapped up the worst week since September and tumbled 4.2% over the past month. The beaten-down prices offer a solid buying opportunity for investors. We have highlighted five stocks — United Airlines UAL, Carnival CCL, Synchrony Financial SYF, NVIDIA Corporation NVDA and Universal Health Services Inc. UHS — from different corners that have declined over the past month.
These stocks have a solid Zacks Rank #1 (Strong Buy) or 2 (Buy), a VGM Score of B or better, lower P/E than the industry average and an encouraging estimated earnings growth rate for the current fiscal year. A top rank suggests rising earnings estimates, which indicate an optimistic view on earnings by analysts and, hence, higher chances of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
What’s Driving the S&P 500 Stock Sell-Off?
Tariff War: One of the biggest reasons for the market slump is the tariff war. President Donald Trump has announced multiple tariffs, and many countries have retaliated or are preparing to hit back, which might lead to a global trade war.
Slowing Economy: The barrage of data indicates that the U.S. economy is slowing down. The Federal Reserve’s Beige Book and the Institute for Supply Management’s manufacturing reading indicated fear of rising input costs, weighed down by Trump's tariff policies. The manufacturing sector slowed down and business activity stalled in February. Consumers are losing confidence in the economy, and U.S. job growth is slowing down.
Inflationary Pressure: The ongoing tariff talks have sparked fears of a resurgence in inflationary pressure and could slow down economic growth. Currently, inflation remains at an elevated level. After a period of declining inflation, inflation picked up in January, fueled by higher grocery, gasoline and rent prices. Consumers' 12-month inflation expectations deteriorated to 4.3%, the highest reading since November 2023, from 3.3% in January.
Why Should You Buy the Dip?
It seems that the President is using tariffs to address trade inequities and encourage domestic manufacturing and investment. Trump had promised to lower inflation and spur growth with tax and regulatory cuts.
Additionally, the slowing economy can compel the Fed to resume rate cuts soon. The odds of a June Fed interest rate cut have increased following the release of the February jobs report. The market is again pricing in three rate cuts for this year.
Further, the boom in AI will continue to fuel growth. Significant investments in AI and related technologies have spurred optimism about future productivity gains and economic expansion. Companies are allocating substantial capital toward AI, anticipating long-term benefits that justify current valuations.
Thus, investors may view the recent slump as a buying opportunity, provided they have the patience to deal with extreme volatility in the near term.