- Trump’s broad tariff plan, announced for April 2, has intensified a global stock market sell-off, with Truist’s Keith Lerner warning of capped upside and persistent earnings risks amid downward US GDP revisions to 1% for 2025.
- Goldman Sachs’ Jan Hatzius cut his 2025 GDP forecast by 0.5% and raised recession odds to 35% from 20%, citing weakened fundamentals, plunging confidence, and White House tolerance for economic pain.
- Tech giants like Tesla (TSLA) and Nvidia (NVDA) lag as markets brace for tariff impacts and potential retaliation, with Lerner highlighting a disconnect between rising S&P 500 (^GSPC) earnings estimates and tariff-driven profit margin threats.
The stock market’s rocky descent shows no immediate signs of abating as April begins, with Truist co-chief investment officer Keith Lerner telling YF that while Trump’s tariff announcement on April 2 might offer temporary relief, any significant rebound remains constrained. Lerner, who shifted his stock outlook from ‘Attractive’ to ‘Neutral’ in late February, points to a troubling disconnect: S&P 500 (^GSPC) forward earnings estimates are climbing even as US GDP revisions trend downward for the first time in years, a dynamic exacerbated by tariff-related profit margin risks. This economic backdrop, coupled with Trump’s Sunday declaration aboard Air Force One that his tariffs will indiscriminately target all countries, has deepened market unease, driving a global sell-off and punishing former tech darlings like Tesla (TSLA) and Nvidia (NVDA), which continue to trail broader indices.
Goldman Sachs (GS) chief economist Jan Hatzius has responded to Trump’s latest tariff stance by slashing, as per YF, his 2025 US GDP forecast to 1%, down 0.5% from prior estimates, while raising the odds of a recession within the next 12 months to 35% from 20%. Hatzius ties this gloomier outlook to weakened economic fundamentals, a steep drop in household and business confidence, and White House signals of tolerance for short-term economic pain to push policy goals—factors that lend credence to the current sentiment slump, unlike its muted predictive power in recent years. The specter of retaliatory trade measures from international partners, alongside the direct hit from elevated US import duties, amplifies the pressure on corporate America, leaving investors to navigate a landscape where downside earnings risks loom large despite optimistic Wall Street projections.
Trump’s tariff rhetoric, far from the targeted approach markets had anticipated, has thrust the global economy into a state of heightened alert, with Monday’s trading session reflecting widespread distress as stocks worldwide buckled under the weight of his comments. Lerner’s analysis underscores a critical tension: the interplay between softening GDP growth – now projected at 1% by Hatzius – and persistent earnings optimism could unravel if tariffs erode profitability, a scenario markets are ill-prepared to absorb. For investors, the confluence of these forces – economic deceleration, trade policy shocks, and fragile confidence – suggests that the turbulent waters of early 2025 are far from calming, with the April 2 tariff reveal poised to either temper or intensify the storm.
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