Investors are pulling back from risk: JPMorgan warns of increasing likelihood of recession

Investors are pulling back from risk: JPMorgan warns of increasing likelihood of recession

This week saw a dramatic event on the US stock markets, with the S&P 500, Nasdaq and Dow Jones Industrial Average posting significant losses. Investors fear a recession could hit the US economy, leading to massive sell-offs in cryptocurrencies and technology stocks.

According to economists at investment bank JPMorgan, the probability of a recession this year has risen to 40%, up from 30% at the start of 2025. Analysts have warned that the US faces a significant risk of recession due to the extreme policies currently in place. The news has raised concerns, even as the White House tries to calm the situation.

Similar concerns were expressed by analysts at Goldman Sachs, who raised the probability of an annual recession from 15% to 20%. They warned that this estimate could rise even higher if the Trump administration continues to stick to its policies, despite the increasingly poor economic indicators.

Meanwhile, Morgan Stanley lowered its economic growth forecast and raised inflation expectations. They estimate that GDP is expected to grow by only 1.5% in 2025, and could fall to 1.2% in 2026.

Kevin Hassett, President Trump's chief economic adviser, did try to dispel fears of a recession, though, saying in an interview with CNBC that there are many reasons to be optimistic about the US economy. Even so, it is noticeable that the data from this quarter show some fluctuations.

Asked about the recession, Donald Trump said the US economy is going through a "transition period". However, these statements are in stark contrast to the reality of the markets, where investors are reacting to growing uncertainty.

Blockchain betting platform Polymarket summed up the situation by saying that the odds on a recession are "the best-looking chart in finance at the moment". And not surprisingly, the indices have lost almost 10% since the beginning of March. The Nasdaq has gone into a correction, losing 14% in just three weeks.

On March 10, all US stock markets closed in the red. The S&P 500 index fell by 2.7%, the lowest level since September, the Nasdaq had its worst day since 2022, falling by 4%, and the Dow Jones Industrial Average lost almost 900 points, or approximately 2.1%.

The "Magnificent Seven" - America's leading technology firms - experienced a tumultuous start to the week, losing more than $750 billion in market capitalisation in a single day. Tesla saw a dramatic 15% drop, making it the worst performing stock in the S&P 500 index this year. Other tech giants such as Nvidia, Apple, Meta and Alphabet also saw significant losses.

In the cryptocurrency space, the situation has also worsened. Crypto markets have plunged to their lowest level since early November, with total market capitalisation falling 7.5% to $2.6 trillion, a loss of around $240 billion.

This situation shows that investors are currently cautious and looking for safer havens while trying to navigate the turbulent economic environment that lies ahead.

*This is not an investment recommendation.

The Coingarage team