Wall Street Warns S&P 500 Dip Buyers of More Turbulence Ahead

Core Viewpoint - Wall Street strategists caution dip buyers that further market volatility may occur despite signals from China and the US indicating a willingness to engage in trade talks [1][2]. Market Performance - The S&P 500 Index increased by 1.6% on Monday, recovering more than half of the losses from Friday, which were driven by renewed tariff tensions [2][6]. - The S&P 500 experienced a 2.7% decline on Friday after President Trump threatened a 100% tariff on goods imported from China, disrupting a period of market stability [6]. Market Sentiment and Predictions - Analysts from firms such as Morgan Stanley, Evercore ISI, and JPMorgan Chase & Co. predict short-term market skittishness due to high valuations and potential economic impacts from the US government shutdown and trade uncertainties [2][4]. - Paisley Nardini from Simplify Asset Management noted that political and fiscal news, along with Federal Reserve policy, is likely to increase market volatility in the latter months of 2025, highlighting the current market's fragility [3]. Correction Risks - Michael Wilson from Morgan Stanley indicated that while pullbacks may present long-term buying opportunities, the S&P 500 is at risk of a correction in the short term, potentially dropping to 5,800 if US-China trade tensions remain unresolved before a November deadline [4]. - Andrew Tyler from JPMorgan expressed concerns about near-term weakness, emphasizing the need for caution due to high equity valuations and uncertain trade negotiations [5].