


The stock market recovery from concerns about a possible tariff-induced trade war may be fragile, cautioned multiple Wall Street firms, as investors look to navigate the challenging macroeconomic backdrop while stock prices swing wildly based on the often shifting tone of President Donald Trump on levies.
Barclays strategists slashed their S&P 500 price target by more than 10% Wednesday, citing the ... More
Up more than 4% from its March 13 bottom, the bellwether S&P 500 will attempt Wednesday its first four-day winning streak in more than two months.
The recent jump traces back to indications Trump’s most expansive set of tariffs coming next week “wouldn’t be as bad as previously feared,” Deutsche Bank strategist Henry Allen explained in a Wednesday note to clients.
However, “risks lean toward an initial tariff announcement that negatively surprises markets,” according to Goldman Sachs economist Alec Phillips.
Trump’s heavily teased reciprocal tariffs will likely be lofty as a negotiation tactic, explained Phillips, nodding to the Canada and Mexico levies “which twice involved a steep tariff rate that was rescinded mostly or entirely after a few days.”
In a Wednesday note, UBS strategist Maxwell Grinacoff expressed his “concerns of renewed weakness” in the stock market unless “policy uncertainty abates,” explaining this uncertainty could cause a broader slowdown in the economy, and as a consequence in corporate earnings.
And in perhaps the most dramatic Wall Street reaction to the latest tariff ado, Barclays strategists slashed their end-of-year price target for the S&P by more than 10%, from 6,600 to 5,900, predicting “earnings take a hit as tariffs contribute to material slowing in U.S. activity.” Barclays’ S&P target is the lowest on Wall Street, according to CNBC, though it still calls for about a 2% gain from the index’s roughly 5,780 level Wednesday.
“Investors are now very focused on the April 2nd reciprocal tariff deadline,” Morgan Stanley strategists led by Michael Wilson proclaimed in a Monday note.
Trump declares April 2 will be “Liberation Day,” the date on which he would unveil his most impactful trade policy yet, reciprocal tariffs, which by definition would slap the same levies on imports that the equivalent American goods face when brought into that country. Reciprocal tariffs are far more complex in practice though – UBS economists estimate such a case-by-case policy would require 2.5 million separate tariff rates – and the Trump administration has recently shown much more interest in targeting a handful of trade partners it believes has shortchanged the U.S. on trade. Trump has struck a far less hawkish stance on trade over the last few days, saying there will be “flexibility” on reciprocal tariffs, the levies will be “nicer” than previously thought and the April 2 actions will be “more lenient than reciprocal.” The uncertainty surrounding tariffs, which some economists warn could tip the U.S. into a recession at the most extreme scenarios floated by Trump, have eaten into consumer confidence, as the Conference Board’s measure fell this month to its lowest level since February 2021.
Even after the latest rebound, the S&P is down 4.1% since Trump’s Jan. 20 inauguration. At this point of Trump’s first term, the index was up 3.2%, excluding dividends.