Why Wall Street Can’t Stand Trump’s Tariffs: Stocks Plunge to Their Worst Year Start Since 2022 | CNN Business

New York — CNN

As we head into a new quarter, Wall Street is feeling the effects of President Trump’s tariffs. This uncertainty has contributed to the worst first quarter for US stocks in several years.

The S&P 500 index has dropped 4.6% this year, marking the most significant downturn since 2022. Investors are finding it hard to navigate the stormy market conditions brought on by these tariff proposals.

On Monday, US stocks showed mixed results. The Dow Jones gained 418 points, or 1%, while the S&P 500 rose 0.55%. After a shaky start, which saw the index dip by 1.65%, it managed to climb back. However, the Nasdaq Composite fell by 0.14%, reflecting ongoing struggles in tech stocks.

Globally, markets reacted negatively ahead of what’s dubbed “Liberation Day,” when additional tariffs are expected to be announced. Many economists warn that these tariffs could lead to inflation and slow down economic growth.

The uncertainty surrounding these tariffs has led many market analysts to lower their forecasts for US stocks. For instance, Goldman Sachs has revised its year-end target for the S&P 500 from 6,200 to 5,700. Other banks like Barclays and UBS have adjusted their predictions downward as well.

Concerns are rising about the potential for a recession. Goldman Sachs now estimates a 35% chance of a recession within the next year, up from 20%. The economic climate is becoming more precarious, with inflation fears spreading among investors.

This turmoil has also affected the US dollar, which has decreased nearly 4% this year, signaling its weakest performance since 2016. Meanwhile, oil prices surged when Trump hinted at imposing additional tariffs on Russian oil, pushing West Texas Intermediate crude to $71.46 per barrel.

Gold prices have hit a new high, climbing over $3,150 an ounce, as investors look for safe havens amid economic instability. Reflecting broader market conditions, gold is on track for its best quarterly performance since 1986.

At the start of the year, US stocks were at all-time highs. Many analysts had anticipated a sustained upward trend, expecting a boom driven by favorable economic policies. However, Trump’s focus on tariffs over other growth strategies has confused investors.

Some media discussions suggest that consumers could feel the pinch, as Trump stated he is indifferent to potential price hikes from automakers due to tariffs. This sentiment resonates with many businesses that are now anxious about cost increases and their impacts on consumers.

Market experts note the mixed signals coming from the administration, causing further uncertainty. Morgan Stanley analysts have echoed this concern, stating that the lack of clear communication is unsettling for investors.

The global impact of these tariffs has been substantial. In Japan, the Nikkei 225 index fell by over 4%, indicating a significant correction. Taiwan’s benchmark also faced declines of around 10% for the quarter. In Europe, the STOXX 600 index and Germany’s DAX index fell as well.

Fear, reflected in the Cboe Volatility Index (VIX), has gripped Wall Street. The “extreme fear” sentiment has dominated the market, with many trading days in March being marked by such concern. Mohit Kumar, an economist at Jefferies, summarized it well by stating that the key issue is the uncertainty around tariffs and countermeasures.

As uncertainty looms, analysts and investors alike are bracing for potential market shifts. Like previous economic fluctuations in history, the current situation reminds us how interconnected our global economy has become. Whether we face rapid changes or a slow grind, the coming days will certainly reveal more about the long-term effects of these policy decisions.

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