Cathie Wood Stands By 'Deflationary Boom' Call As Gene Munster Compares Market Turmoil To Dot-Com Bubble

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."

In our view, the market today is discounting the last leg of a rolling recession, which will give the Trump Administration and the Powell Fed many more degrees of freedom than investors expect, setting up the US economy for a deflationary boom in the second half of this year. https://t.co/p2qOq8jqAS

— Cathie Wood (@CathieDWood) March 10, 2025

The SPDR S&P 500 ETF Trust SPY fell 3.04% in one of its steepest declines in recent years, while the tech-heavy Invesco QQQ Trust QQQ dropped 4.49%, crossing the 10% threshold that indicates a correction.

Tesla Inc. TSLA suffered the heaviest losses among the Magnificent Seven, plunging 17.6%. NVIDIA Corp. NVDA fell 6.74%, Meta Platforms Inc. META dropped 6.05%, and Apple Inc. 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.

This week marks the 25th anniversary of the Dot-Com bubble's peak. It's a good time to revisit my prediction that we still have a couple of strong years left in the market before the AI bubble bursts. Some would argue that the AI bubble has already burst, given that the Nasdaq is…

— Gene Munster (@munster_gene) March 10, 2025

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.

It's stupid policies driving this correction. No need to look further. https://t.co/MbqUVsm5FM

— Ross Gerber (@GerberKawasaki) March 10, 2025

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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• Jamie Dimon Cashed Out $234 Million In JPMorgan Stock, Warren Buffett Stockpiled $334 Billion In Cash — Weeks Later, Markets Crashed. Coincidence?

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.