US Stock Market Preview On April 7: Black Monday Likely, Will Dow Jones, S&P 500, Crash Further?

US stock market Monday prediction: The meltdown of Wall Street last week, has left a significant impact on investors globally. On Monday, in the early trade deals, Asian cues faced multi-year low performance, while the Indian stock market crashed sharply to hit a nine-month low. US stock futures on Monday, have extended their market rout for the third session in a row, indicating a grim opening for Wall Street later in the day. Hence, a prediction of restless bears in Dow Jones, Nasdaq and S&P 50 is once again on the cards.

US Stocks Futures:

The Dow Jones Futures nosedived by 1,593 points or 4.17% to trade at 36,952, while the Nasdaq 100 futures plunged by 964 points or 5.50% to trade at 16,584.25. A similar pattern was seen in S&P 500 futures which dropped by 243 points or 4.82% to trade at 4,864. So far, due to fear of Black Monday, the Dow touched an intraday low of 36,708, while Nasdaq and S&P 500 futures touched the day's low of 16,460 and 4,832 respectively.

US futures have extended their three consecutive sessions losing streak as Trump continues to stubbornly push tariffs on foreign countries.

As per Trading Economics, the recent selloff began on Thursday when President Donald Trump unveiled surprisingly high reciprocal tariffs, with the Dow losing 7.9% last week, while the S&P 500 and Nasdaq Composite declined 9.1% and 10%, respectively. China also decided to retaliate on Friday with a 34% tariff on all US imports instead of negotiating, adding to market concerns. Moreover, Canada and the EU were reportedly planning to follow China's lead. Over the weekend, the Trump administration downplayed the market selloff and maintained that tariffs would push through as planned.

Wall Street Hanging At Thin Thread!

Last week, Wall Street witnessed one of its worst trading days on April 4th, with Dow Jones down 2,231.07 points to 38,314.86. Dow Jones is now merely 653.31 points away from hitting its 1-year low of 37,611.56. Meanwhile, the S&P 500 declined by 5.97% to 5,074.08, marking its biggest drop since March 2020, the year of the first wave of Covid-19. The S&P 500 has dropped by over 17% from its highs. Coming to Nasdaq, the tech-heavy index plunged by 5.8% on Friday, extending its losses of 6% on April 3 while also recording over a 22% decline from December peak levels.

The US indices have been down for the second consecutive sessions after Trump's reciprocal tariffs stirred more panic than calm. From April 3rd to 4th, Dow Jones dipped by 3,910.46 points or 9.3%, the S&P 500 meanwhile shed 596.89 points or 10.5%, and lastly Nasdaq Composite dropped by 2,013.26 points or 11.43%.

Wall Street Prediction On Monday:

According to Bajaj Broking research, the massive market fall on Monday reflects heightened investor anxiety over global trade tensions and recession fears. It underscores the fragility of market sentiment and the need for coordinated policy responses to stabilize economic conditions.

Apart from global trade tensions, the upcoming FOMC minutes and CPI inflation data will play a key role. On Monday, April 7th, consumer credit data will be released in the USA, while companies like Levi Strauss & Co. (LEVI), Greenbriar Companies Inc. (GBX), and Dave & Buster's Entertainment Inc. (PLAY) will announce their earnings.

Puneet Singhania, Director at Master Trust Group said, "The minutes of the US Federal Open Market Committee (FOMC) meeting will be released on the night of Wednesday, 09 April, providing key insights into the Fed's outlook on interest rates, inflation, and the overall economic condition."

On upcoming inflation print, Puneet added, "The upcoming US CPI and Core CPI data are to be released on Thursday, 10 April, which is expected at 0.1% and 0.3% (MoM), respectively. These inflation indicators are closely watched by the Federal Reserve as they play a critical role in shaping monetary policy."

Hence, the market is expected to see a bearish tone on Monday as well. What could offer relief?

For the US market this week, Nathan Peterson, senior derivatives analyst at Charles Schwab, in his note said, "While Q1 earnings season unofficially starts next Friday with the big banks, the focus, and direction for stocks, will be tied to any global trade developments. If nothing changes or, worse, if we get retaliation from other countries, stocks will likely remain under selling pressure. Of course, any positive developments and stocks will likely be poised for a sharp rebound given the current oversold status (more on this in the "Technical Take" section below). Therefore, my forecast for next week is "Breakout," which I define as a greater than 2.0% move, either higher or lower, by next Friday. I would like to provide a directional bias, but I simply can't since I don't know what the news flow will be over the next week."

A rate cut by the US Federal Reserve could provide temporary relief by lowering borrowing costs and improving liquidity. However, its effectiveness may be limited if inflationary pressures from tariffs persist. The rate cut could also lead to capital outflows from emerging markets like India as investors seek safer assets, as per the Bajaj Broking report.

Bajaj's note said the aggressive tariff regime is likely to reshape global trade dynamics, leading to reduced international trade volumes and potential supply chain disruptions. Emerging economies may face challenges in maintaining export competitiveness, while developed economies could see inflationary pressures.

Also, Bajaj's note said, the ongoing tariff war could accelerate the shift towards regional trade agreements and localized supply chains. Central banks globally may adopt more accommodative policies to counteract economic slowdowns. Investors should remain vigilant and prioritize liquidity and risk management in their portfolios.