This uncertainty is affecting investors on Wall Street, as tariffs proposed by President Trump hang like a sword of Damocles over the market. The ultimate effect of these tariffs is still unknown and this uncertainty has market participants on edge. Trade analysts are cautioning that the tariffs will do more harm than good by slowing the economy, raising unemployment and feeding inflation. In light of these concerns, Goldman Sachs has estimated a 35% chance of a recession within the next 12 months.
Recent assessments from major financial institutions reflect the growing unease. Goldman Sachs analysts have done an about-face, revising their year-end target for the S&P 500 from 6,200 down to just 5,900. Just yesterday, Barclays cut their target to 5,900 from 6,600. These changes explicitly highlight the unpredictability and economic consequences that the tariffs have introduced to the market.
The benchmark S&P 500 index isn’t immune to the pressure, having just gone bearish and being down over 5% on the year. On Monday, the Nasdaq composite opened 1.3% lower. This decline signals the beginning of its first down quarter since September 2023. If that continues, this quarter will be the worst since September 2022. The market is getting crushed with this huge weight of all these tariff worries.
Uncertainty around the details and the roll-out of Trump’s tariffs has only added to investor worry. Market participants remain on tenterhooks. Like the rest of us, they’re looking forward to hearing more specifics that might shed light on how these tariffs will play out and impact various sectors of the economy.