Stocks are hovering near their lowest levels of the year, with President Trump’s latest tariff announcements and fears about the US economy’s path forward sending equities lower in the final full week of the first quarter.
In the last five days of trading, the S&P 500 (^GSPC) fell nearly 3%, while the Dow Jones Industrial Average (^DJI) slipped about 2%. The tech-heavy Nasdaq Composite (^IXIC) led the losses, falling nearly 4%.
In the week ahead, Trump’s tariffs will take center stage as the president’s April 2 “Liberation Day” looms on Wednesday. The president is expected to announce reciprocal tariffs on that day, with investors closely watching for specific details on how steep the levies will be.
Later in the week, the focus will shift to the labor market, with the March jobs report set for release on Friday. Updates on private payrolls and job openings, as well as activity in the services and manufacturing sectors, are also expected to gain attention.
On the corporate front, it’s expected to be a quiet week for quarterly earnings releases.
A tariff event ‘markets can’t dismiss’
Trump’s widely anticipated tariff announcements are expected to come on Wednesday. And there’s a growing list of Wall Street firms that believe markets may not be prepared for what’s coming.
The economics team at Goldman Sachs says it believes markets will be surprised to the downside. Goldman’s recent survey of market participants shows investors likely expect a 9-percentage-point reciprocal tariff rate, per chief political economist Alec Phillips. But Goldman’s team believes the initially proposed rate will be higher, potentially closer to double what market participants expect.
“Administration officials have said explicitly that the soon-to-be announced tariff rates are intended as the basis for negotiation, which incentivizes the administration to propose higher rates at the outset,” Phillips wrote. “This occurred in the recent experience with Canada and Mexico tariffs, which twice involved a steep tariff rate that was rescinded mostly or entirely after a few days.”
Trump provided markets with a tariff appetizer last week when announcing 25% tariffs on foreign-made vehicles. Ajay Rajadhyaksha, the global chairman of research at Barclays, said during a media roundtable that these tariffs were “a bigger deal than the market is making it out to be.”
“It is a statement of intent,” Rajadhyaksha said. “And at least in my mind, it releases the risk that April 2 is something that markets can’t dismiss. I think we will be negatively surprised.”
A pivotal labor report
Trump’s tariff turmoil has spooked consumers at a time when economic data is already showing signs of slowing growth and sticky inflation. On Friday, a release from the Bureau of Economic Analysis showed prices increased more than expected in February while consumer spending increased less than projected. Less than two hours after the release, the latest University of Michigan Consumer Sentiment survey showed expectations for inflation over the next year jumped to 5% in March, the highest since November 2022.
The developments sent stocks tumbling, with the S&P 500 falling about 2% on Friday alone.
Citi US equity strategist Scott Chronert wrote in a note to clients that Friday’s market action was an example of the prospect of stagflation — where inflation remains sticky and economic growth slows — getting further priced into the market.
For now, economists have largely argued that the economy is only slowing from its above-growth trend of the past few years but not headed for recession. A key part of this narrative has been a labor market that is cooling, but not collapsing. The week ahead will bring a fresh look at just how quickly the jobs market is softening.
The March jobs report, set for release on Friday morning, is expected to show the US labor market added 135,000 jobs in the month, down from the 151,000 seen in February. Meanwhile, the unemployment rate is expected to hold steady at 4.1%.
“Risks around this report may be asymmetric,” Morgan Stanley chief US economist Michael Gapen wrote in a note to clients previewing the event. “We think it would take a lot of employment growth to alleviate fears of a sharper slowdown in the economy, while a mildly below-consensus print could fuel those concerns.”
Poor guidance
Amid the tariff talk, more companies than usual are falling short of analyst expectations with their earnings guidance. Of the 107 S&P 500 companies to issue guidance for the first quarter, 68 have issued negative guidance, per FactSet.
This is above the five-year average of 57 companies issuing negative guidance and the 10-year average of 62. FactSet notes that negative guidance occurs when the number provided by a company is lower than the consensus earnings per share estimate from the day before the announcement.
For now, this is one example of how Wall Street entered 2025 overly optimistic. As first quarter earnings season kicks off in earnest on April 11, the big market question will be whether analysts, and the market as a whole, have rerated their expectations low enough as corporates navigate the tariff headwinds.
Weekly Calendar
Monday
Economic data: MNI Chicago PMI, March (45.5 expected, 45.5 prior); Dallas Fed manufacturing activity, March (-5 expected, -8.3 prior)
Earnings: No notable earnings releases.
Tuesday
Economic data: Job openings, February (7.69 million expected, 7.74 million previously); ISM Manufacturing Index, March (49.8 expected, 50.3 prior); S&P Global US manufacturing PMI, March final (49.8 previously)
Earnings: No notable earnings releases.
Wednesday
Economic data: MBA Mortgage Applications, week ended March 28 (-2% expected); ADP Private Payrolls, March (+119,000 expected, +77,000 previously); Factory orders, February (0.4% expected, 1.7% prior); Durable goods orders, February final (0.9% prior); Capital Goods orders nondefense excluding air, February final (-0.3% prior)
Earnings: BlackBerry (BB), RH (RH)
Thursday
Economic data: Challenger jobs cuts, year-over-year, March (+103.2% previously); Initial jobless claims, week ending Mar. 29 (224,000 previously); S&P Global US composite PMI, March final (53.5 previously); S&P Global US services PMI, March final (54.3 prior); ISM services index, March (53.1 expected, 53.5 prior)
Earnings: Conagra Brands (CAG), Lamb Weston (LW), Guess (GES)
Friday
Economic calendar: Nonfarm payrolls, March (+135,000 expected, +157,000 previously); Unemployment rate, March (4.1% expected, 4.1% previously); Average hourly earnings, month-over-month, March (+0.3% expected, +0.3% previously); Average hourly earnings, year-over-year, March (+3.9% expected, +3.9% previously); Average weekly hours worked, March (34.2 expected, 34.1 previously); Labor force participation rate, December (62.4% previously)
Earnings: No notable earnings releases.
