Ark Funds CEO Cathie Wood forecasts a “deflationary boom” as markets tumbled on Monday, with the Magnificent Seven tech stocks shedding approximately $780 billion in market capitalization.
What Happened: Wood wrote on X that the market is pricing in the final phase of a rolling recession, which she believes will grant President Donald Trump‘s administration and the Federal Reserve Chair Jerome Powell "far more flexibility than investors anticipate." She predicted this shift would pave the way for "a deflationary boom in the second half of the year."
The SPDR S&P 500 ETF Trust (NYSE:SPY) fell 3.04% in one of its steepest declines in recent years, while the tech-heavy Invesco QQQ Trust (NASDAQ:QQQ) dropped 4.49%, crossing the 10% threshold that indicates a correction.
Tesla Inc. (NASDAQ:TSLA) suffered the heaviest losses among the Magnificent Seven, plunging 17.6%. NVIDIA Corp. (NASDAQ:NVDA) fell 6.74%, Meta Platforms Inc. (NASDAQ:META) dropped 6.05%, and Apple Inc. (NASDAQ:AAPL) declined 5.91%.
Deepwater Management‘s Gene Munster drew parallels to the Dot-Com bubble’s 25th anniversary, noting his optimism “has taken a step back” as recession probabilities increase.
“If we enter a recession, it will be extremely difficult for the AI trade to continue,” Munster warned, though he maintained that “if a recession is avoided,” markets could reach new highs in the coming years.
See Also: Chamath Palihapitiya Calls Proposed 10% Credit Card Interest Rate Cap ‘Disruptive’ As Trump, Sanders, And Lawmakers Push For Reform
Why It Matters: Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, attributed the correction to “stupid policies,” responding to Vice President JD Vance‘s statement about the administration’s economic approach favoring U.S. investment.
Investor concerns center on potential recession risks and Trump’s tariff plans. Despite the recent selloff, the Magnificent Seven maintains a median price-to-earnings ratio of 35, with Tesla still trading at more than 100 times earnings.
Polymarket bettors currently place the odds of a 2025 recession at 41%.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
