Analysis-Tariff-driven Wall Street pain sparks investors to weigh more gloomy scenarios

Lewis Krauskopf and Saqib Iqbal Ahmed

Mon, Apr 7, 2025, 10:03 PM 5 min read

By Lewis Krauskopf and Saqib Iqbal Ahmed

NEW YORK (Reuters) - A melodramatic U.S. banal descent is fanning fears of adjacent much dire scenarios for the market, arsenic investors measurement the imaginable for a prolonged planetary commercialized warfare and a overmuch dimmer firm nett outlook.

Stocks swung wildly connected Monday, with the benchmark S&P 500 down good implicit 4% astatine 1 point, arsenic investors continued to grapple with President Donald Trump's sweeping tariffs that past week drove the biggest play driblet for the banal marketplace since the onset of the COVID-19 pandemic 5 years ago.

With truthful overmuch unclear astir wherever the tariff conflict volition lead, Wall Street strategists contemplated however overmuch much of a beating stocks could take, including that the S&P 500 could autumn by astir fractional from its February 19 all-time high. The scale ended connected Monday astatine 5,062.25, down much than 17% from that peak.

Matthew Maley, main marketplace strategist astatine Miller Tabak, said a diminution successful the S&P 500 successful coming months to 4,300 was "very possible," and a autumn to 4,000 oregon little was not retired of the question. Trade tumult aside, Maley said, markets had been overly optimistic astir the near-term nett imaginable from artificial quality and not decently factoring successful weakening user behavior.

"This is much than tariffs," helium said. "This is the process of the marketplace falling backmost successful enactment with its underlying fundamentals."

The worst-case scenarios from immoderate analysts saw the S&P 500 dropping arsenic overmuch arsenic astir 50% from its all-time high, which would beryllium akin to the aftermath of the bursting of the dot-com bubble successful 2000.

The caller driblet has been 1 of the steepest concentrated selloffs for U.S. stocks, connected par with the velocity and strength of drawdowns seen during the COVID-19 swoon successful 2020 and the fiscal situation descent successful 2008, and has enactment the S&P 500 adjacent to carnivore marketplace territory.

The S&P 500's combined 10.5% diminution past Thursday and Friday was the index's 4th biggest two-day driblet since 1950, according to Keith Lerner, co-chief concern serviceman with Truist Advisory Services. The biggest two-day falls occurred successful March 2020, erstwhile COVID-19 was hitting; successful November 2008, during the fiscal crisis; and successful 1987, for the two-day play that included Wall Street's "Black Monday."

Despite the chaotic swings connected Monday, the S&P 500 ended down conscionable 0.2%. Even so, the Cboe Volatility index, Wall Street's "fear gauge," registered its highest closing level successful 5 years.

JPMorgan equity strategists connected Monday outlined a year-end S&P 500 people of astir 4,000 arsenic their "bear case," which included assumptions of nary tariff alleviation and a 2026 net presumption that implied 2 years of nary existent nett growth.