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2022 redux?

The stock market is flashing familiar warning signs that burned investors three years ago.

The S&P 500 has strung together back-to-back winning days though it remains down 3.3% so far in 2025. Investors have been trading through patterns similar to 2022, when the Federal Reserve’s aggressive rate hikes pushed the benchmark index to a 19.4% annual loss. 

Instead of monetary tightening, however, fiscal policy is steering markets this year.

Tariff uncertainty, government spending cuts and shifting immigration trends have dampened corporate outlooks and fueled growth concerns, echoing the impact of Fed hikes three years ago. 

“This administration doesn’t appear to be preoccupied with stock prices,” Morgan Stanley strategist Mike Wilson wrote in a Monday note to clients. 

The question is whether these fiscal pressures will drag on portfolios as much as rising interest rates did in 2022. 

Technical indicators have broken down in an eerily familiar way.

The S&P 500, Nasdaq 100, and small-cap indices have all recently traded below their 200-day moving averages, flipping them from support to resistance levels, according to Wilson. 

“Major US equity indices are as oversold as they’ve been since 2022,” Wilson said. “At a minimum, this kind of technical damage will take time to repair, even if it doesn’t lead to more price degradation at the index level.”

Unlike 2022, when falling valuations drove much of the sell-off, today’s decline is largely rooted in deteriorating earnings revisions. 

Not only has the White House agenda been less conducive to growth than anticipated to start the year, in Morgan Stanley’s view, but the speed and uncertainty of decisions have dented investor, consumer and corporate confidence.

The Fed, meanwhile, remains sidelined.

Though it has rate cuts at its disposal, traders aren’t expecting them anytime soon. 

Investors in 2022 underestimated the Fed’s resolve to tighten policy, and markets today may be misjudging the White House’s commitment to its economic strategy. 

“This will take time to sink in just like a very hawkish Fed in 2022,” Wilson said. “And therefore, several failed rally attempts are likely.”

Market snapshot

Elsewhere:

📉Another Wall Street firm slashed its S&P 500 outlook. RBC Capital Markets lowered its year-end target from 6,600 to 6,200, citing concerns on economic growth. This follows similar adjustments from Goldman Sachs and Yardeni Research. (Yahoo Finance)

🇺🇸 President Trump and Russia’s Putin plan to talk Tuesday. The two world leaders will look to end the war in Ukraine. Moscow hasn’t yet signed the cease-fire deal that Kyiv agreed to. Trump said Sunday: “We want to see if we can bring that war to an end. Maybe we can, maybe we can’t, but I think we have a very good chance.” (WSJ)

📊Want more scoops from Wall Street? Get exclusive insights from Semafor Business, a twice-weekly newsletter covering the movers, shakers, and power players of finance. Join 60,000 executives and subscribe free.

🤝 Elon Musk and Sam Altman set a courtroom date. The proposal came in a join court filing Friday from Musk, Altman, OpenAI, Microsoft, and others, asking for a two-week trial starting December 8. Musk claims that Altman breached various agreements in his ambition to convert OpenAI to a for-profit enterprise. (Yahoo Finance)

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About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at phil@openingbellmedia.com.