The stock market crashed Monday, sending shockwaves through Wall Street as the S&P 500 dropped 2.7%, while the Nasdaq Composite tumbled 4%. The sell-off, triggered by economic slowdown fears, tech sector weakness, and rising uncertainty around Federal Reserve rate cuts, has traders asking: Has the market bottomed, or is there more pain ahead?
Prediction markets, particularly Kalshi’s S&P 500 yearly range contracts, suggest investors remain split on the future direction of equities. The most actively traded year-end probability bands indicate a sharp divide between expectations for a moderate recovery and a deeper downturn:
- S&P 6200-6399 → 12% probability
- S&P 6400-6599 → 13% probability
- S&P 6600-6799 → 9% probability
With the Federal Reserve’s next meeting approaching, inflation data set for release next week, and continued layoffs hitting the job market, prediction market traders are weighing in on whether the worst is over — or if the sell-off is just getting started.
5 signs the bottom might not be in
1. Economic slowdown concerns are growing
The latest employment report released Friday showed the U.S. economy added 151,000 jobs in February, slightly below expectations, while unemployment ticked up to 4.1% from 4.0%.
Meanwhile, mass layoffs across major industries have raised alarms. ABC News is cutting 200 jobs, while the Department of Veterans Affairs announced plans to reduce its workforce by over 80,000 employees — a significant rollback aimed at returning to pre-pandemic staffing levels.
2. Tech sector sell-off signals market instability
The technology sector — which has been the backbone of stock market gains for years—was hit hard in Monday’s sell-off.
- Tesla stock plunged 15.4%, following reports of weaker-than-expected deliveries and increasing competition in China.
- Nvidia tumbled 5.1%, as AI-related stocks lost momentum after a historic rally.
- Apple slid 3.8%, despite recently announcing a $500 billion U.S. investment in domestic manufacturing.
Analysts have raised concerns that Trump’s trade policies and tariff uncertainty could trigger a flash crash. According to Ed Yardeni, president of Yardeni Research, the market is experiencing heightened volatility amid geopolitical and economic uncertainty.
“We cannot rule out the possibility that a downturn began on February 20, the day after the S&P 500 hit an all-time high,” Yardeni wrote in a memo to clients, attained by MarketWatch.
3. Uncertainty over Federal Reserve rate cuts
Interest rate expectations remain one of the biggest wild cards for markets. Kalshi’s rate cut prediction markets currently show:
- Two cuts → 22% probability
- One cut → 13% probability
- Three cuts → 21% probability
The upcoming Consumer Price Index (CPI) report, scheduled for release tomorrow on March 12, will be a major test for markets. If inflation remains higher than expected, the Federal Reserve may delay rate cuts, keeping financial conditions tight and markets under pressure.
4. Bearish analysts expect more downside
Some analysts are growing increasingly pessimistic about the stock market’s near-term outlook.
Ed Yardeni, who previously forecasted the S&P 500 reaching 7,000 by year-end, has turned more cautious.
“I wonder if Trump’s tariff confusion 2.0 could trigger a flash crash without accompanying a recession,” Yardeni wrote in a note to investors, reported by MarketWatch.
He explained that a flash crash, similar to those seen in 1962 and 1987, involves a sharp decline followed by an equally rapid rebound, creating an opportunity for investors to buy less overvalued stocks.
“So when selling occurs, there are buying opportunities in less overvalued stocks,” he added.
Yardeni raised his assessment of the U.S. entering a recession from 20% over the past three years to 35%, citing increasing signs of economic strain.
5. Possibility of a flash crash
While the economy remains resilient, some investors fear an extreme market event could accelerate losses.
Yardeni warned that recent instability could serve as a stress test for the market, increasing the risk of an unexpected downturn.
“Trump’s confusion is significantly testing the resilience of both the U.S. economy and markets,” he said.
Yardeni also no longer believes the Federal Reserve will intervene aggressively to rescue markets.
“I no longer rely on the Fed put,” he stated, referring to the idea that the central bank would step in to support financial markets during downturns.
So, what's next?
The recent stock market crash has injected uncertainty into what had been a relatively strong year for equities. Prediction markets remain split, suggesting investors are unsure whether the worst is over or if more downside lies ahead.
With inflation data, Fed policy decisions, and ongoing layoffs shaping the market outlook, traders will be watching closely to determine whether this is a temporary dip — or the start of a prolonged downturn.
For now, forecasts suggest caution, with probabilities spread across multiple scenarios. Investors, too, seem to be waiting for the next economic signal before making their next move.
