The stock market closed out its worst quarter since spring 2022 on Monday as the Trump administration’s evolving trade policies rattle Wall Street.
Investors have struggled to find a foothold amid a barrage of new tariffs, which have been subject to repeated announcements and reversals since Inauguration Day. Worrisome new economic data has also reignited recession fears.
President Donald Trump is pushing for more sweeping tariffs to be announced Wednesday, which he has billed “Liberation Day” for the U.S. economy. But many investors are keeping cash on the sidelines while they wait for the administration’s trade policies to settle, analysts say. Markets loathe uncertainty, and the recent tariff rollout seems primed to deliver just that, said Michael Farr of the D.C.-based investment firm Farr, Miller & Washington.
“While rhetorical bombast can be very effective and indeed has been effective as a negotiating strategy for President Trump, a volatile political environment is upsetting to the stock market,” Farr said in an interview.
The stock market downturn has entirely erased the short-lived rally that followed Trump’s November election win, when investors pinned their hopes on pro-business policies such as tax cuts and deregulation.
While trading was mixed Monday — the S&P 500 and Dow Jones Industrial Average regained some of their losses and were up for the day by the time markets closed — the past three months have seen steady declines. Since the start of the year, the S&P 500 index is down 4.6 percent, while the tech-heavy Nasdaq composite index has fallen by 10.4 percent. The Dow, which includes a narrower set of stocks, is down by about 1 percent.
The recent volatility is underscored by conflicting messages about how far the White House will go Wednesday.
Top Trump aides had said they would impose new tariffs on “the Dirty 15,” or the 15 percent of nations determined by the administration to have the worst trade practices. That proposal would target a huge swath of U.S. trade but could pave the way for individual deals with countries and allow specific tariffs to be gradually reduced.
In recent days, however, Trump has pressed advisers to return to his 2024 presidential campaign plan to impose a single, universal rate on all U.S. trading partners as high as 20 percent. Without providing specifics, White House aide Peter Navarro said Sunday that Trump’s tariffs would raise $600 billion a year, or $6 trillion over 10 years, which appeared to reflect the universal tariff plan.
In addition, Trump suggested Sunday that he was considering a tariff measure that would apply to every country. “You’d start with all countries,” Trump told reporters on Air Force One.
White House spokeswoman Karoline Leavitt declined Monday to share details about Wednesday’s announcement, but when asked whether farmers would be affected, she said, “No exemptions at this time.”
White House officials are studying a 1977 law that gives the president emergency powers as a way to enact 20 percent tariffs on all imports, according to three people familiar with the matter who spoke on the condition of anonymity to reflect private deliberations. The White House has previously announced tariffs on the auto sector and on Sunday reiterated interest in tariffs on lumber and pharmaceuticals.
As the tariff threat heats up, analysts say the stock market could see more volatility, with much depending on what happens Wednesday.
“The April 2 deadline could be a major directional catalyst for most global markets, in either direction,” Larry Tentarelli, chief technical strategist for the Blue Chip Daily Trend Report, wrote in a note to investors.
The market volatility has driven a rush to “safe haven” assets such as gold, while speculative tech stocks and cryptocurrencies have suffered.
Meanwhile, several industrial sectors that the Trump administration’s tariffs are designed to help have seen stock prices suffer amid concerns that imported components will become more expensive.
Since the start of the year, General Motors has fallen by around 12 percent, while Stellantis has lost about 14 percent. Tesla, which has been hit by a consumer backlash, is down close to 36 percent for the year, while its competitor Rivian has lost 6 percent. Among the major automakers, only Ford eked out a gain in the first quarter.
Wedbush Securities analyst Dan Ives said he thinks that the auto tariffs, in particular, will “send the auto industry into upside-down mode” as the automakers struggle to reconcile their global supply chains with steep new import duties, upping the average car price by $5,000 to $10,000.
But stocks linked to discretionary goods have suffered the worst in the past month, according to an analysis by CRFA chief investment strategist Sam Stovall, as investors sense a broader slowdown in the consumer economy. Stocks within the S&P 500 linked to footwear, apparel, luxury goods and home furnishings lost almost 20 percent in March alone, according to Stovall’s analysis.
Consumer spending fell by 0.6 percent in January and inched up 0.1 percent in February after adjusting for inflation, according to government data. A survey from the University of Michigan, meanwhile, showed that Americans’ views on the economy fell for a third straight month, hitting the lowest level since 2022.
The weakest retail sales in March were in sporting goods, books and electronics, while health and personal care spending was steadier, Dana Telsey, chief executive of Telsey Advisory Group, wrote in a Monday note.
Rising uncertainty around Trump’s tariffs have tanked consumer confidence and fueled caution from companies and shoppers, Telsey added.
“The lower to middle income consumer faces more challenges and will need to stretch their dollars and spend on basics, while the upper income consumer has the means to continue spending on goods and services,” Telsey wrote.
Meanwhile, the big tech stocks known as the “Magnificent 7,” which drove the market to new heights in 2023 and 2024, are now dragging the tech-heavy Nasdaq index lower. Of the seven — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — five have lost 10 percent or more since the start of the year.
Analysts say the tech sell-off is also linked to trade policy, and specifically the fear that inflation stemming from the tariff hit could prop up interest rates longer than many had expected.
“It may still take some time before the questions that have been on investors’ minds will be answered,” Brent Schutte, chief investment officer of the Northwestern Mutual Wealth Management Company, wrote in a blog post Monday. “Until then, uncertainty is likely to continue and may result in volatility.”
