Analysts at Goldman’s trading desk estimate that as much as $33 billion of selling could hit US equities this week, telling investors that they need to “buckle up,” according to Bloomberg News.

If the S&P 500 falls below 6,707, an additional $80 billion could be shed over the next month, Goldman analysts estimated.

A fresh selloff could hit Wall Street as soon as this week, with Goldman Sachs’ proprietary Panic Index signaling markets are near “max fear” despite Friday’s rally. Getty Images

Investor stress surged last week, with Goldman’s Panic Index — which combines measures including one-month S&P implied volatility and VIX volatility — climbing to 9.22, a level signaling markets are approaching “max fear.”

The jump reflects investors paying up for downside protection in options markets as they brace for larger and more frequent price swings, even after last week’s rebound.

Such elevated volatility conditions often coincide with price moves that trigger selling by Commodity Trading Advisers, or CTAs — systematic, trend-following funds that adjust exposure based on market momentum rather than fundamentals.

The S&P 500 has already breached short-term thresholds that set off CTA selling, and Goldman expects those funds to remain net sellers in the days ahead, regardless of whether stocks rise or fall, according to Bloomberg News.

“Big shifts in views take months and quarters to develop, not days. So stay zoomed out to avoid overtrading,” said Dean Lyulkin, founder of The Dean’s List, urging investors not to overreact to recent market volatility.

Lyulkin pointed to strength beyond technology stocks, saying that “while tech is down, causing the S&P 500 to trade at a loss, the majority of our counterbalance themes are showcasing their strength.”

Friday’s rally was widely viewed as a relief bounce rather than a shift in underlying market conditions. Google Finance

He told The Post that foreign stocks, US small caps “and the equal weight S&P 500 are all doing well,” while noting that “the commodity component of our portfolio strategy is doing poorly as crypto falls in concert with risk assets and tech,” even as the Fed held rates steady and the economy is on “firm footing.”

US stocks ended last week on a strong note after a volatile stretch, with the S&P 500 jumping about 2% on Friday in its biggest one-day gain since May.

The rebound helped the index claw back much of its midweek losses, though it still finished below recent highs after sharp declines earlier in the week driven by a selloff in technology shares and renewed volatility across risk assets.

US stocks ended last week on a strong note after a volatile stretch, with the S&P 500 jumping about 2% on Friday in its biggest one-day gain since May. Google Finance

Friday’s rally was widely viewed as a relief bounce rather than a shift in underlying market conditions, driven largely by dip-buying after a bruising, tech-led selloff earlier in the week.

Investors reassessed fears about AI-driven disruption and heavy Big Tech spending, with some judging the pullback as overdone, while the rebound reflected a technical reset and short covering rather than a new macro catalyst.

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The tech-heavy Nasdaq dropped 0.2% Friday, closing the week down 3% – its worst drop since the April launch of President Trump’s “Liberation Day” tariffs sparked a massive sell-off. 

Stocks tumbled on Friday as consumer sentiment plunged near all-time lows and investors panicked over AI spending. Getty Images

Concerns about the government shutdown – which entered its 38th day on Friday, setting a new record — sent monthly consumer sentiment to its lowest level in over three years.

The reading of 50.3 marked a drop of 6.2% on the month and about 30% from this time last year – near the worst-ever level for consumer sentiment, according to data released by the University of Michigan on Friday.

Along with worries about the shutdown, broader economic concerns regarding inflation remained top of mind for many Americans. Prices on everything from a cup of coffee and kids’ toys to living room furniture and Amazon deals have soared.

“Consumers perceive pressure on their personal finances from multiple directions,” Joanne Hsu, director of the University of Michigan survey, told Bloomberg. “Consumers also anticipate that labor markets will continue to weaken in the future and expect to be personally affected.”

The only time that consumer confidence in their finances and the economy has been worse came in June 2022, during a historic rise in inflation.

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Meanwhile, investors have been panicking over massive AI spending, questioning whether stocks have been overvalued – reminiscent of the dot-com bubble in the late 1990s.

The worst-performing stock in the S&P 500 this week was Super Micro Computer, which sells equipment for AI data centers. The stock fell about 25% this week.

About $1 trillion in market value was wiped from a drop in shares this week of Microsoft, Nvidia, AMD, Palantir, Oracle and Meta.

President Trump touted his economic agenda earlier this week after the GOP suffered defeat in key races across the country. Getty Images

AMD, Nvidia and Oracle each fell about 10% this week.

Shares in Meta, which owns Facebook, Instagram and WhatsApp, dipped about 6% during the same timeframe, while Microsoft tumbled roughly 5%.

The tech sell-off started earlier this week, after software giant Palantir reported earnings on Tuesday. 

Analysts raised concerns about whether Palantir’s valuation was inflated, and Michael Burry revealed a short position in the firm. REUTERS

Although Palantir beat earnings across the top and bottom lines, analysts raised concerns about whether the company’s valuation was inflated – and “Big Short” investor Michael Burry revealed a short position in the firm.

Alex Karp, chief executive of Palantir, quickly ripped into short selling as “market manipulation.”

While his company’s stock jumped about 1.5% Friday, it was down more than 13% this week.

Nvidia CEO Jensen Huang fueled the panic over artificial intelligence investments after he told the Financial Times that China would likely “win the AI race.”

Investors grew concerned after Nvidia CEO Jensen Huang said China would likely “win the AI race.” via REUTERS

Although he later tried to backpedal, writing that “China is nanoseconds behind America in AI,” investors worried that huge investments into the new tech may not pay off.

While Nasdaq ended the week on a low note, the Dow Jones Industrial Average and S&P 500 saw small upticks Friday, with the Dow rising about 75 points, or nearly 0.2%, and the S&P going up around 0.1%.

Earlier this week, Trump touted his economic agenda after Election Day wins by New York City’s socialist Mayor-elect Zohran Mamdani and Dem gubernatorial candidates Mikie Sherrill in New Jersey and Abigail Spanberger in Virginia.

When asked on Friday whether he was concerned about an AI bubble, Trump replied, “No, I love AI.”

“We’re leading China, we’re leading the world,” he said.

Some tech stocks saw smaller declines this week.

Alphabet was down less than 1%, while Apple was set to end the week roughly flat.

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The markets would love the move; President Trump could move forward with his broader plans of isolating the rogue of the global trade, China, with its high tariffs and frequent theft of US intellectual property.

He would avoid an existential threat to his young presidency in a tariff-induce economic meltdown that could lead to rampant inflation and a recession.

President Trump meeting in the Oval Office with Japanese Minister of State for Economic and Fiscal Policy Ryosei Akazawa on April 16, 2025. Molly Riley/White House/ZUMA Press Wire / SplashNews.com

But that was last week, and there are still no deals — at least none that look imminent by press time Monday — which is why the markets resumed trading after the weekend in free fall. It didn’t help that Trump added to the uncertainty, when he called Fed Chair Jerome Powell a “major loser,” more than hinting that he will try and remove him over his reluctance to cut interest rates because tariffs might stoke inflation.

Stocks fell more than 2%, depending on the index. The Dow crashed 1,200 points at one point, bond yields spiked, and other more ominous signs: A flight not to US treasuries or the dollar but gold and Bitcoin, the world’s largest crypto currency that has no inherent value other than what some bro in his basement thinks it’s worth.

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The trade war wasn’t supposed to go down this way.

Dan Ives, the veteran tech analyst for Wedbush, put it this way: “The White House needs trade deals done quick with a negotiation path established with China otherwise the markets, 10-year yield, USD, Gold, and the economy will head down their own divergent paths over the coming weeks and months ahead.”

So far, businesses have held back from announcing layoffs amid the uncertainty because, as one institutional investor put it, “Trump might be able to pull this off,” and cut favorable trade deals.

But what if he doesn’t?

That’s the increasingly key concern for big investors and corporate CEOs as they see their costs rise because of tariffs and a possible economic slowdown.

Consider: Japan was thought to be close to getting a deal, but then nothing happened. One top investor said he was told by a Japanese trade official that the White House keeps fiddling with the exact terms. The White House believes that Japan along with the other nation’s on Bessent’s list have been slow to remove protectionist trade barriers for US goods.

Wall Street believes messaging is still a problem. The more trade centrist Bessent appears to be spearheading the efforts, but  Trump’s voluble and hawkish Commerce Secretary Howard Lutnick remains in the trade meetings along Jamieson Greer, the US trade. ambassador. All three were in last week’s White House confab with the Japanese trade minister Ryosei Akazawa.

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Peter Navarro, the uber hawkish Trump trade guru is always in the mix.

Most worrisome is that markets, and businesses in general, love certainty and Trump is anything but a straight arrow when it comes to negotiations; his skill is to keep the other side off balance as he did successfully with banks during his long career in real estate and business.

It worked then. The question is will it work now as he negotiates with countries instead of creditors.

“In the end, it doesn’t matter what Bessent thinks or does because he works for Trump,” one banker who deals with the White House told me. 

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President Trump this week revived a longstanding threat against Jerome H. Powell when he accused the Federal Reserve chair of “playing politics” and moving too slowly to lower interest rates. But privately, according to people close to Mr. Trump, the president has for months been aware that trying to oust Mr. Powell could inject more volatility into jittery financial markets.

Investors are already uneasy after a period of tumult due to a blitz of tariffs announced by the administration this month. Undermining the political independence of the Fed, which is seen as critical across Wall Street, could risk a much more significant financial panic.

“If I want him out, he’ll be out of there real fast, believe me,” Mr. Trump told reporters in the Oval Office of the White House on Thursday when asked about Mr. Powell. The warning came on the heels of an early morning social media post in which Mr. Trump said, “Powell’s termination cannot come fast enough!”

Mr. Trump’s advisers have repeatedly told him that firing Mr. Powell is both legally and financially fraught — and that the uncertainty could cause a significant downturn in financial markets. Mr. Trump, at least for the moment, has seemed persuaded, the people said.

For months, Mr. Trump has privately fretted about the prospect of a Great Depression-scale event’s happening on his watch — a scenario he shorthands in conversations as “1929.” But the events of the past two weeks so alarmed some of Mr. Trump’s closest advisers, including his Treasury secretary, Scott Bessent, that Mr. Trump himself seems to have absorbed how close they came to a financial meltdown.

Mr. Trump’s decision at the beginning of the month to announce historic tariffs on nearly all of the country’s trading partners and aggressively escalate his global trade war sent financial markets into a tailspin. Stocks plummeted, and an alarming sell-off in U.S. government bonds and the dollar fanned fears that the country was starting to lose its vaunted status as the safest corner in the financial system.

After the scope of Mr. Trump’s tariffs became clear, Mr. Powell cautioned that the policies would lead to both higher inflation and slower growth. His comments suggested that the bar would be high for the Fed to lower rates, after a series of cuts last year.

Mr. Trump soon reversed course and paused many of his tariffs for 90 days, citing a “queasy” bond market. But that reprieve ended swiftly as Mr. Trump raised tariffs on Chinese imports to at least 145 percent even as he exempted an array of the most widely used consumer electronics and heralded imminent trade deals with other countries. The whiplash has kept financial markets on edge and has done little to alleviate Mr. Powell’s concerns about the economic outlook.

At an event at the Economic Club of Chicago on Wednesday, Mr. Powell made clear that it was the Fed’s “obligation” to ensure that “a one-time increase in the price level does not become an ongoing inflation problem” even as he reiterated his warnings about the prospects of slower growth. He also stressed that the Fed could afford to be patient on taking further action on interest rates until it had more clarity about the outlook.

Those comments, coupled with the fact that the European Central Bank was readying to lower interest rates on Thursday, appeared to set off Mr. Trump’s tirade against Mr. Powell.

Even before the recent bond market turmoil, it seemed to advisers that Mr. Trump was leery about firing Mr. Powell. Mr. Trump regularly complains about how “terrible” Mr. Powell is and that he believes the Fed chair is deliberately keeping interest rates high to hurt him, for political reasons, an adviser said, but the president has not seemed serious about replacing him imminently.

Last week, Mr. Bessent, who described the Fed’s independence as a “jewel box that’s got to be preserved,” said the White House would begin interviewing candidates this fall to replace Mr. Powell. Mr. Trump had nominated Mr. Powell in his first presidential term, and President Joseph R. Biden Jr. renominated him. Mr. Powell’s term as chair officially ends May 2026, although his term as a governor runs through 2028, suggesting that he could stay on the Fed’s Board of Governors if he wanted to. Mr. Trump will first be able to fill a vacancy in January, when the term expires for Adriana Kugler, a sitting governor.

The president has already appointed Michelle Bowman, a current governor, to be the next vice chair for supervision in charge of regulating Wall Street. That position became available in February after Michael Barr, who stayed on as a governor, stepped down from the position to avoid a protracted legal battle with Mr. Trump that he worried would hurt the central bank.

Kevin Warsh, a former Fed governor with close ties to Mr. Bessent, is seen as a leading contender to serve as the next chair. During the transition, Mr. Trump was interested in the idea of making Mr. Warsh, whom he had considered for Fed chair in his first term, his Treasury secretary. The president also considered installing him as Fed chair to replace Mr. Powell before the end of his term, according to people briefed on his thinking. At the time, Mr. Trump inquired about his legal rights to fire Mr. Powell, and what the broader effects of such a move would be.

Mr. Powell has been emphatic that the law does not permit a president to remove the chair of the central bank nor meddle directly with the institution. The Federal Reserve Act says members of the Fed’s seven-strong Board of Governors can be removed only “for cause,” which is interpreted as serious misconduct and other violations.

When asked by reporters on Friday about the possibility of firing Mr. Powell, Kevin Hassett, the director of the National Economic Council, said, “The president and his team will continue to study that matter.” Later in the day, Mr. Trump again pushed the Fed chair to lower rates but didn’t discuss his future.

The Fed’s independence from the White House has historically been seen as crucial to the stability of the economy and the global financial system. Congress granted the central bank this status to ensure it could make policy decisions related to the economy and the banking system free from political interference.

The fear is that Mr. Trump will seek to erode that protection. Already, he has issued an executive order that seeks to exert authority over how the Fed oversees Wall Street. Monetary policy decisions were exempted, but the expansive nature of the order has raised questions about how long that separation will last.

Mr. Trump has also fired officials at the Federal Trade Commission, the Merit Systems Protection Board and the National Labor Relations Board, removals that have prompted legal challenges that the Supreme Court is set to hear.

What the Trump administration is arguing is that the precedent — which stems from a 1935 ruling commonly referred to as Humphrey’s Executor — infringes on the president’s executive power. The ruling’s proponents argue that it insulates independent agencies from undue political influence.

This month, Chief Justice John G. Roberts Jr. temporarily authorized Mr. Trump’s dismissals while the challenges move forward in court. The chief justice, acting on his own, issued an “administrative stay,” an interim measure intended to give the justices some time while the full Supreme Court considers the matter.

Mr. Powell said on Wednesday that he did not expect the court’s decision to apply to the Fed, but that it was something the central bank was “monitoring carefully.” The Fed’s independence is a “matter of law” and “very widely understood and supported in Washington and in Congress, where it really matters,” he added.

Tony Romm contributed reporting.

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