Investors are holding record levels of cash ($7.3 trillion), indicating significant caution and potential for further market downside.
Concerns about the Trump administration’s tariffs and policy uncertainty, including the threat of universal tariffs, are weighing on market sentiment.
S&P 500 recorded its biggest one-day drop since December.

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Wall Street Indexes have recovered overnight but investors remain cautious. This is evidenced by data from the Investment Company Institute. According to the data, cash levels are high with assets at money market funds at a record.

Cash levels climbed steadily last week, reaching a record high of $7.3 trillion, according to Peter Crane, president of Crane Data, a firm specializing in tracking market flows. This marks an increase from approximately $7.17 trillion at the start of 2025, Crane noted.

This could in part be why recent dips have not enjoyed significant bounces as they did in the past.

Source: LSEG

Markets have bounced somewhat this morning following yesterday which turned out to be the biggest one-day drop this year for Wall Street’s main Indexes. The S&P 500 had its biggest one-day drop since December 18 because of worries that the Trump administration’s tariffs might lead to a serious trade war.

The Nasdaq also saw its largest percentage drop since September 2022. It had already fallen 10% from its peak late last week.

Altogether, the market selloff wiped out $4 trillion in value from the S&P 500’s high point just a month ago.

The optimism around a Trump Presidency appears to be fading as the uncertainty of tariff policy is now starting to affect and dampen sentiment. The constant flip-flopping around policy has left market participants unconvinced and does not inspire confidence.

The threat of universal tariffs still in the pipeline for April has added to the uncertainty and increased bets of a recession. This is also weighing on sentiment.

All of these developments have led to the CBOE Volatility index closing at its highest level since August.

A snapshot of Market Performance paints a dour picture.

Source: LSEG (click to enlarge)

Adding to the gloomy outlook, Citi was the latest brokerage to change its view on U.S. stocks. It downgraded its recommendation from “overweight” to “neutral” while upgrading Chinese stocks to overweight.

US Data Ahead & Funding Bill in Focus

On the day front, focus will now shift to Jobs data with job opening and labor turnover survey due later in the day. Market participants will also be keeping a watch on Capitol Hill as voting begins for a funding bill to avoid a partial Federal Government Shutdown.

All of this comes ahead of the highly anticipated CPI release due tomorrow.

Overall sentiment does not seem all that bright moving forward with the potential for further losses growing.

Technical Analysis

Dow Jones

From a technical standpoint, the Dow Jones remains in a bearish trend and continues to break through crucial support levels.

Any attempted push higher has been met with significant selling pressure as dip buyers have not come to the fore. A sign of the current cautious approach we are seeing by market participants.

The Dow is trading at levels last seen in September 2024 after yesterdays 900-odd point move.

Gains from earlier in the day have now been wiped away as the Dow trades below support at the 42000 handle with the next level of support of resting at 41400 before the 41000 handle comes into focus.

Immediate resistance rests at 42000 before the 42446 and 42764 handles comes into focus.

The 14-day RSI is currently in oversold territory and thus a short-term bounce cannot be ruled out.

Dow Jones (US30) Daily Chart, March 11, 2025

Source: TradingView (click to enlarge)

Support

41400
41000
40738

Resistance

42000
42446
43402

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Dow Jones (DJIA), S&P 500 Under Pressure as Record Cash Levels Suggest More Downside Ahead