Wall Street Slashes Forecasts as Trump Tariffs Rattle Markets
Wall Street forecasters are rapidly revising their outlooks for US equities as President Donald Trump's sweeping tariff policies threaten global economic stability.
John Stoltzfus of Oppenheimer & Co., previously the market's most optimistic strategist, has dramatically reduced his year-end S&P 500 target from 7,100 to 5,950 points. Morgan Stanley's Michael Wilson cautions the benchmark could decline another 7-8% if the administration maintains its tariff stance.
Other major firms including Evercore ISI, Goldman Sachs, and Societe Generale have similarly lowered their projections in recent days.
Stoltzfus noted Monday that investors are struggling with "uncertainty at levels investors find hard to embrace," alongside "a negative pitch book that seemingly projects negative outcomes to infinity." Despite his significant reduction, his forecast still anticipates a 17% market recovery, though he acknowledges corporate executives are expressing increased caution.
S&P 500 futures plummeted up to 5.4% on Monday, pushing the benchmark toward bear market territory after erasing over $5 trillion in value during the previous week's two-day selloff.
The market turbulence follows Trump's announcement of the most severe US tariffs in a century—a 10% levy on all US imports, with higher duties targeting approximately 60 nations, including China and European Union members. China has already announced retaliatory measures, escalating trade tensions and heightening recession fears.
Global markets have reacted sharply, with Europe's Stoxx 600 Index falling as much as 6.5% and an MSCI Asian market gauge suffering its worst single-day decline since 2008, dropping over 8%. The CBOE Volatility Index—Wall Street's "fear gauge"—surged beyond 60 points.
Bitcoin Plunges Amid Market Turmoil
Bitcoin fell 10% over the past 24 hours to trade just under $74,700 as the trade war continues to rock global markets. The cryptocurrency's decline may foreshadow further stock market troubles, according to Geoff Kendrick, Standard Chartered's global head of digital assets research.
"Sometimes crypto movements on Sunday tell you what stocks are going to do Monday," Kendrick wrote in a Monday note. "If that is the case, Monday could be ugly."
Futures tracking the Nasdaq and S&P 500 plunged more than 4.6% early Monday, signaling a potential crash when markets open in New York. Friday saw the Nasdaq 100 fall over 5% and the Dow drop more than 2,200 points, drawing comparisons to the October 1987 "Black Monday" crash.
"This is a man-made obliteration," warned CNBC's Jim Cramer during Friday's show, noting the setup eerily resembles the three-day decline preceding the 1987 crash.
Market sentiment has deteriorated rapidly, with Polymarket bettors now placing the chances of a US recession in 2025 at 65%, up from under 40% just days earlier. The crypto-betting platform also gave Bitcoin a 67% chance of trading below $78,000 by April 11.
Despite the immediate carnage, Kendrick suggested the slump could ultimately benefit Bitcoin, arguing it may recover to its previous $84,000 level and prove its value as a hedge against market turmoil.
"Bitcoin will become a hedge against tariff risks this time around," Kendrick stated. "US isolationism is akin to increased risks of holding fiat, which will ultimately benefit Bitcoin."
Meanwhile, the broader crypto market has suffered significant losses, with Ethereum dropping 18.8% to trade at $1,460.
Goldman Sachs strategist David Kostin observed that markets don't yet appear to be pricing in a full recession, though the bank's economists now estimate a 45% probability of recession within 12 months.
Investors are increasingly looking to the Federal Reserve for potential relief through accelerated interest rate cuts. While Trump has called for rate reductions, Fed Chair Jerome Powell indicated policymakers would likely maintain current rates while assessing the tariffs' inflationary impact.