CNN chief data analyst Harry Enten explains chances of a possible recession following a plunge in US stocks.

(CNN) — The tariff-induced market mayhem isn’t over just yet.

US stock futures plunged Sunday evening after two sessions of sell-offs that wiped away over $5.4 trillion in market value. Stocks were set to open sharply lower Monday, putting the S&P 500 on the precipice of a bear market — a decline of 20% from its peak and an ominous sign for investors and perhaps the broader economy.

Dow futures were down 1,500 points, or 4%. S&P 500 futures fell 4.3%, while Nasdaq futures tumbled 4.7%.

The price of US oil fell more than 3%, sinking below $60 a barrel for the first time since April 2021. Oil prices have been in a freefall as investors fear tariffs could plunge the global economy into a recession that would sap demand for flights, shipments, transportation and travel — all activities that require fuel.

Bitcoin joined the declines, too — falling 5.6% to $78,736.93. Bitcoin had surged above $100,000 shortly after Trump was elected in the hopes that he’d help boost support for cryptocurrencies.

The massive declines in futures follow the worst two-day stretch for stocks in five years – since the pandemic. The markets have rejected President Donald Trump’s massive tariff regime, some of which went into effect early Saturday morning and even larger tariffs are set to launch on Wednesday morning. China retaliated fiercely Friday, imposing a 34% tariff on all US goods, raising fears of an escalating and damaging trade war.

“Last week’s brutal selling pressure is set to continue on Monday, as the market is telling us that investors still lack clarity on the implications of tariffs, tariff retaliation and are worried that economic growth is likely to slow to a complete stall or recession,” said James Demmert, chief investment officer at Main Street Research.

A universal tariff went into effect Saturday after Trump signed an executive order earlier in the week requiring a baseline tax for all imports. The announcement sparked an outcry from America’s trading partners — allies and foes alike — along with American businesses, investors and consumers.

On Wednesday, America will impose significantly higher “reciprocal” tariffs on nearly 90 countries that have the highest trade imbalances with the United States.

Trump has also put in place tariffs on autos, steel and aluminum. He placed 25% tariffs on certain goods from Canada and Mexico.

And more tariffs could be on their way, too: Tariffs on auto parts are set to go into effect no later than May 3. And Trump has also threatened tariffs on lumber, pharmaceuticals, copper and microchips, among other products.

“The tariffs are coming. (Trump) announced it, and he wasn’t kidding. The tariffs are coming. Of course they are,” Commerce Secretary Howard Lutnick told CBS’s “Face the Nation” on Sunday.

Market mayhem

Recession fear has gripped Wall Street in recent days. JPMorgan analysts said last week that the tariffs would hike taxes on Americans by $660 billion a year — the largest tax increase (by a longshot) in recent memory. It will cause prices to surge, too, adding 2% to the Consumer Price Index, a measure of US inflation that has struggled to come back down to earth in recent years.

If Trump maintains the massive tariffs he announced Wednesday, his unprecedented trade policies will probably cause both the US and global economies to fall into a recession in 2025, JPMorgan analysts said. JPMorgan analysts on Thursday raised the risk of a recession to 60%, while Goldman Sachs last week raised its probability of a recession in the next 12 months to about 35%.

The Dow closed in correction territory Friday, down more than 10% from its record high in December — the first time the index has closed in correction in more than three years. The Nasdaq closed in a bear market for the first time since 2022, down more than 20% from its record high in December.

And the S&P 500 is on the precipice of a bear market. It has fallen 17.4% since setting an all-time high on February 19, and it is set to open Monday in bear market territory.

Investors did not appear to be calmed by the fact that Trump has been meeting with leaders of multiple countries, perhaps to strike deals that could lower the tariffs. Trump is scheduled to hold a press conference with Israeli Prime Minister Benjamin Netanyahu on Monday afternoon following a meeting that is set to include discussion of tariffs.

Markets have tumbled because the tariffs could raise prices significantly for American businesses and consumers. That’s because importers pay the tariffs, not the countries exporting the goods that Trump has been targeting.

Companies that import the goods typically pass along all or some of that cost to wholesalers, retailers and, ultimately, consumers. Although some retailers with strong supply chain controls may eat some of the cost, others will be unable to take such a hit.

Federal Reserve Chair Jerome Powell on Friday acknowledged that Trump’s tariffs, which were significantly more aggressive than the central bank had expected, would drive prices higher and slow down the economy. Powell said the Fed wasn’t in a rush to act but was monitoring the effect tariffs have on the economy.

The nonpartisan Tax Foundation said the average American household will pay $2,100 a year more for goods because of the significant universal and reciprocal tariffs Trump announced Wednesday. It said America’s average import tax will surge to 19% this year from 2.5% last year — the highest rate since the Smoot-Hawley era in 1933. Fitch Ratings said the rate would rise even higher, sending America’s effective tariff rate to its highest level in more than a century.

As a result, Americans’ after-tax incomes will decline 2.1% on average this year, the Tax Foundation said.

The good news, perhaps, is that the stock plunge has created some buying opportunities for investors. Stocks are trading at a historically cheap 15 times future earnings projections now. That could help markets rebound if investors believe stocks are oversold.

“We are getting close to a bottom,” said Demmert. “The fact that stocks have dropped so significantly in these deep intraday moves is a clear sign of indiscriminate and fear-based selling. When this happens, we tend to soon see significant rallies.”

This story has been updated with additional content.

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