The S&P 500 index has faced a tumultuous period, with a significant drop of 8.3% since reaching its record high on February 19, 2025. This decline has raised concerns among investors and analysts alike, particularly as President Donald Trump prepares to announce new tariffs that could exacerbate the situation. Wall Street professionals are bracing for further sell-offs, as uncertainty looms over the potential impact of these trade measures.
According to Bloomberg, major Wall Street firms, including Goldman Sachs and Bank of America, anticipate that the tariffs announced on the evening of April 2, 2025, will not only heighten market volatility but also deepen the ongoing decline of the S&P 500, which has just experienced its worst quarter since 2022. The trading desks that analyze the flow of money between institutional and retail investors have expressed growing apprehension that Trump's trade war could negatively affect corporate profits and disrupt supply chains.
In a note dated March 28, 2025, Goldman Sachs highlighted that the expected volatility this week is comparable to the levels seen during the U.S. elections in November. The sentiment on Wall Street is shifting, with many traders feeling increasingly pessimistic. The trading division at JPMorgan has adopted a tactically bearish stance on stocks, citing both political uncertainty and the potential repercussions of the tariffs on the economy.
Alexander Altmann, global head of tactical equity strategies at Barclays, voiced his concerns regarding the ambiguity surrounding Trump's announcement, suggesting that it leaves room for interpretation and keeps trade policies in flux. He remarked, "Uncertainty is the grave digger for everything in the markets. It prevents investment decisions, corporate spending, as well as business and consumer confidence," according to Bloomberg News.
As anticipation builds for Trump's announcement, recent official data revealed that U.S. factory activity declined in March for the first time this year, while prices surged for a second consecutive month, amplifying fears of economic instability. The S&P 500's current decline has led some strategists to reassess their earlier predictions. At the end of last year, many had forecasted that the S&P 500 would continue its upward trajectory, with a median target of 6,600 points by the year’s end. However, three of Wall Street's most reliable bulls have now acknowledged that their estimates were overly optimistic, even as they maintain a belief that U.S. stocks will rebound in the remaining three quarters of 2025.
Warnings are now emerging from several trading departments that the S&P 500, currently hovering around 5,600 points, could plunge further. John Tully of Bank of America predicted that the index might fall below 5,500, while a recent UBS report suggested a potential drop to 5,400 points if the White House imposes tariffs of 20%. Michael Romano, head of hedge fund equity derivatives sales at UBS Securities, conveyed to clients, "There is a wide range of outcomes with a pronounced severity in both directions. Particularly concerning is the high probability assigned to extreme downward movements."
Despite the troubling news, on April 2, 2025, the S&P 500 saw a slight uptick, closing 0.67% higher at 5,670.97 points. The index's market capitalization now stands at approximately 46.891 trillion euros. However, earlier in the day, it had opened with losses of 1.11% at 5,570.60 points, following a previous day’s close of 5,633.07 points. Throughout the trading session, the S&P 500 reached a daily high of 5,695.31 points, while its lowest level was recorded at 5,571.48 points.
Since the beginning of the week, the S&P 500 has gained 2.59%. However, it has already lost 3.37% since the start of 2025, with an annual high of 6,147.43 points and an annual low of 5,488.73 points. The strongest performers within the index include Leidos (+5.91% to 142.94 USD), Caesars Entertainment (+5.80% to 26.27 USD), Leggett Platt (+5.60% to 8.30 USD), Gap (+5.47% to 22.38 USD), and Tesla (+5.33% to 282.76 USD). Conversely, the weakest stocks are The Hershey Company (-3.34% to 163.95 USD), Altria (-2.84% to 57.12 USD), MarketAxess (-2.36% to 210.83 USD), Mondelez (-2.25% to 66.13 USD), and GE Aerospace (-1.97% to 199.77 USD).
In terms of trading volume, NVIDIA shares are currently the most traded, with over 40 million shares exchanged on the NYSE. Meanwhile, Apple holds the largest market capitalization within the S&P 500 at 3.108 trillion euros. Notably, the SVB Financial Group is projected to have the lowest price-earnings ratio (P/E ratio) in 2025, estimated at 0.00, while First Republic Bank is expected to lead in dividend yield with an astonishing 1,200% according to FactSet estimates.
As traders navigate through this period of uncertainty, the upcoming tariff announcement is expected to further shape market dynamics. With corporate caution prevailing and mixed economic data emerging, the outlook for equities remains precarious. Investors are keenly awaiting Friday’s nonfarm payrolls report for insights into labor market resilience and potential implications for Federal Reserve policy.
