After another tumultuous day for stocks, the S&P 500 is once again knocking on the door of bear market territory—but it hasn’t crossed the threshold just yet.

The SPDR S&P 500 ETF Trust (SPY) dropped 19% from its all-time closing high to Tuesday's close, just shy of the 20% drawdown typically used to define a bear market.

On an intraday basis, SPY did dip more than 20% from its highs on Monday on Tuesday, but most market watchers aren’t calling it official without a close below that line.

QQQ Officially Enters Bear Market

Another widely-followed stock market benchmark, the Dow Jones Industrial Average, hasn't quite entered bear market territory, either. The SPDR Dow Jones Industrial Average ETF Trust (DIA) closed 16.5% below its highs on Tuesday.

The Nasdaq-100, however, has already fallen into the bear’s grasp.

The Invesco QQQ Trust (QQQ) , which tracks the tech-heavy index, was down 21.5% from its all-time closing high at Monday’s close, marking its first official bear market since 2022.

However, this selloff looks quite different from the last one. Back in 2022, inflation was surging, interest rates were rising and markets were digesting the aftermath of pandemic-era supply chain chaos.

This time, the trigger is far more direct: President Donald Trump’s sweeping "reciprocal tariffs," which have upended investor sentiment and stoked fears of an all-out trade war.

In the last bear market, the S&P 500 ultimately dropped more than 25% from peak to trough, while the Nasdaq fell nearly 36%. Whether this downturn follows the same path remains to be seen.

Bulls Hold Out Hope

Some investors still hold out hope that the S&P 500 will avoid entering a full-blown bear market. Unlike past drawdowns driven by entrenched macroeconomic forces, this one is largely the result of political decision-making.

If President Trump walks back his tariff threats, markets could breathe a sigh of relief. But if tensions escalate or if the economic cracks start to widen, a deeper selloff may be hard to avoid.

For now, all eyes are on Washington, D.C.

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